Companies on the Dubai stock exchange have been identified as the best trade options in a new report, while Saudi Arabia has been highlighted as the most promising investment case in the region.
The two markets are selected in the Bank of America Securities-Merrill Lynch research report BAS-ML GEM Strategy: Do Buy Dubai.
The news will come as some relief to listed construction and real estate firms, whose share price has been dogged by negative sentiment in the wake of the collapse in property demand.
Under the section 'why Dubai is a good trading buy' the report said: “It is hard to find much that has underperformed US banks in the past three years, but Dubai has, thanks to a real estate and oil bust. In addition Dubai has been a big underperformer relative to regional Gulf markets.”
The report also listed a number of reasons why Saudi Arabia was considered the best long term investment. These included oil reserves, a high percentage of the GCC’s GDP, economic diversity and sovereign wealth fund assets.
Shares in Emaar reached a low of US $0.47 (AED1.74) earlier this year on the Dubai Financial Market from a 12 month high of $3.19. Emaar shares are currently trading at $1.01.
Shares in the UAE’s biggest contractor Arabtec bottomed out at $0.19 this year from a 12 month high of 5.42. They are currently trading at $0.82.
The building and construction sector of Tadawul, the Saudi Arabian stock exchange, took a sharp dive in September last year, but since the start of March this year is showing signs of recovery.
The report tied in the price of oil with the performance of the Dubai financial market. “The relative performance of the Gulf markets tends to lag movements in the oil price by three months,” it said. “The Gulf markets should outperform in coming months.”
Oil is trading today at over $68 per barrel. “Our commodity strategists now see risks that the oil price rises to $75-80 in the next few months,” the report said.
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