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Thursday, January 8, 2009

UAE, Kuwait shares 'among world's most attractive'

By Soren Billing
Investors are beginning to differentiate between different GCC stock markets, and valuations in the UAE and Kuwait are among the most attractive in the world, Rasmala said on Thursday.

The regional investment bank said that although it is cautiously optimistic that the worst is now over, a recovery will not be uniform across GCC markets and sectors.

“The global economic picture will be important, but domestic factors will increasingly play their part as governments across the region announce fiscal, monetary and regulatory measures to deal with the current challenges posed by the global economic crisis and lower oil prices,” Khaled Al Masri, partner at the bank, said.
The region’s markets reacted differently to local, regional and international factors in December, signaling that investors are beginning to differentiate between markets and stocks after an indiscriminate sell-off over the past few months.

Valuations of UAE listed equities, which are trading at around five times 2008 earnings, are the lowest in the region and among the most attractive globally, according to Rasmala.

“Lingering uncertainties surrounding the announced restructuring of the mortgage sector and a decimated domestic investor base are precluding a near-term recovery in the market, despite extremely attractive valuations,” Al Masri said.

Valuations of Kuwaiti stocks are also seen as some of the most attractive in the region, but continuing fears over the investment sector and lingering political squabbles are weighing on investors and delaying a recovery, despite official support for the market.

The Kuwaiti central bank last month cut its repurchase rate by 50 basis points to 2.5 percent and has lowered the minimum reserve requirements for banks.

With current valuations at under nine times 2008 earnings, a dividend yield of close to 5 percent and an expansionary fiscal and monetary policy, Rasmala believes Saudi equities are well positioned for any improvement in the global economic environment.

Gas rich neighbour Qatar was the best performing regional market in December, with gains of close to 13 percent.

“The market has been exhibiting sensitivity to both the global environment and oil prices and has benefited from the improvement of both these factors over the month, and the Qatari economy is expected to be one of the fastest growing global economies over the next few years,” Al Masri said.

Valuations of Omani stocks are in line with the regional average and the market awaits fourth quarter results from leading companies to determine whether current valuations are attractive, according to Rasmala.

Source : Arabian Business

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