Bullish growth projected for GCC stocks in 2014
The Gulf region is gradually becoming a mainstream investment destination for international funds. That trend looks set to persist, with the upgrade by equity index compilers MSCI and S&P Dow Jones Indices of Qatar and the UAE to emerging market status to take effect in May next year.Overall macroeconomic outlook remains strong; markets still returning to 2008 peaks; but valuations no longer cheap; risk of drop in oil prices; big spending won’t necessarily feed into bottom lines.
Gulf stock markets will stay bullish in 2014, but rises are likely to slow because valuations have become more expensive and there are threats to the strong economic outlook, fund managers said.US and European markets have regained peaks hit before the global financial crisis in 2008. Gulf markets are still around 15 percent to 50 percent below those peaks — so they have plenty of room to continue playing catch-up.The region is gradually becoming a mainstream investment destination for international funds. That trend looks set to persist, with the upgrade by equity index compilers MSCI and S&P Dow Jones Indices of Qatar and the UAE to emerging market status to take effect in May next year.
But Gulf stocks are no longer as cheap as they were relative to the rest of the world, and some economic shifts may not be ideal for markets. So their uptrends are likely to moderate, and sectors may not gain across the board as they did this year.“There should be some moderation in the scale of rerating” the Gulf markets higher, said Amer Khan, fund manager at Shuaa Asset Management, though he predicted “tangible and visible earnings growth” for the region. — SG
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