Gulf stocks may remain robust

Gulf Arab stocks will probably hold their value this year as oil earnings boost the region's economies even after benchmarks jumped in 2007 leaving "few bargains" for investors, according to Nomura Holdings Inc.

"Valuations should be supported by a resilient macro-economic environment, lower interest rates, moderate earnings growth and plentiful liquidity" this year, Bahrain- based Nomura analyst Tarek Fadlallah said yesterday.

Local and overseas investors bought shares in countries including the United Arab Emirates and Saudi Arabia on rising corporate earnings, attractive prices and speculation Gulf Cooperation Council (GCC) states will revalue their currencies against the dollar, Fadlallah said.

GCC states, which together pump a fifth of the world's oil, are earning more than $1.3 billion a day with oil above $90 a barrel. Oman's benchmark jumped 60 percent in 2007, while Abu Dhabi's rose 52 percent and Saudi Arabia's 41 percent, as fund managers at companies including BlackRock Inc and Deutsche Asset Management invested for the first time.

Foreign investors "sense the genuine capacity to political desire to sustain the GCC economic juggernaut and the limited appetite to suppress any market exuberance", Fadlallah wrote.

Nomura joins investment banks including Goldman Sachs Group Inc, Morgan Stanley and Merrill Lynch & Co that recommended Arab stocks last quarter. Economies in the Middle East will expand 9.2 percent this year, according to Morgan Stanley, almost double the 4.8 percent global growth projection by the Washington-based International Monetary Fund.

The six GCC states are Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Bahrain and Qatar.

Agencies

(China Daily 01/08/2008 page16)