Nomura said it started coverage of the Gulf Cooperation Council (GCC) equity markets with a constructive short and long-term view. The brokerage said factors such as GCC's strong economic fundamentals, equity liquidity, increasing liberalization of the financial sector and likely graduation of at least some GCC markets from frontier to emerging status should increase institutional participation. “We believe that GCC's status as one of the easiest places to do business in the world (both developed and emerging) is not being properly acknowledged,” the brokerage said in a note. Nomura said it is overweight on Qatar, Saudi Arabia and Kuwait. However, it is neutrally weighted on Dubai due to a weak outlook offset by low values and did not have a compelling valuation case for Abu Dhabi. “We believe that UAE economic performance will continue to be hindered by debt and excess capacity work-outs in Dubai and to a lesser extent in Abu Dhabi, although we do find some selective value in Dubai,” the brokerage said. Gulf stocks extended gains over the week, propelled by first quarter earnings, steady oil prices and the positive performance of global markets, analysts said Friday. They also expected regional bourses to derive fresh momentum from reports about sustainable world recovery, particularly in China, where the world's third economy grew at a strong 11.9 percent pace in the first quarter of the year. “I believe the surging Chinese economy and indications about a sustainable world recovery in general will enhance demand for oil and consequently push crude prices further,” a portfolio manager said. “Higher oil prices will mean larger surplus petrodollars which mostly seek investment outlets in stock markets,” he said. Saudi shares were volatile this week as the Tadawul All Share Index (TASI) tested a strong resistance area of 6,900 points, analysts said. TASI gained 1.7 percent this week, closing at an 18-month high of 6,890.74 points, mainly driven by the earnings of petrochemical and banking sectors. “I believe the Saudi market is taking a more healthy course and heading to fresh gains,” said Abdullah Baeshen, board chairman of the Riyadh-based TeamOne financial consultancy. “The first quarter results and the performance of foreign markets are apparently reflecting positively on Saudi stocks,” he added. Kuwaiti shares suffered this week mainly due to reports that the US army was replacing the Kuwaiti logistics firm, Agility, by a new company as the main supplier to the US military in Kuwait and Iraq, analysts said. Kuwait's KSE all-share index shed 2.44 percent in the week, closing at 7,385 points. “I believe the market came to suffer during the last two days of the week due to sell-off by speculators who targeted leading stocks,” Maitham Al-Shakhs of the Global Investment House said. United Arab Emirates stocks rebounded this week amid improving prospects for rescheduling Dubai World debts and the resumption of foreign buying, analysts said. The benchmarks of the Dubai and Abu Dhabi stock exchanges gained 2.9 percent and 1.2 percent, to close respectively at 1,816 points and 2,857 points.
