Nomura joins growing chorus concerned about overheated Gulf stocks | The National

Nomura joins growing chorus concerned about overheated Gulf stocks | The National:



"The chorus of fund managers warning that Arabian Gulf stocks are getting too hot has just grown one notch louder. The asset management arm of Nomura Group, best known for being Japan’s biggest securities brokerage, has joined the increasing number of well-informed voices expressing concern that equity valuations in the region are exceeding prospects for corporate profit growth.



Tarek Fadlallah, the head of Nomura Asset Management’s Middle East operations in Dubai, said that regional stock prices, particularly in the UAE, have been boosted too much by an ample amount of cash in circulation as well as ease of access to cheap financing. The situation, he said, was reminiscent of behaviour before the previous crash in 2008.



“Alas, the spectre of a stock market driven increasingly by liquidity rather than reasonable valuations raises uncomfortable parallels with the risk-taking activity across the region a few years ago,” Mr Fadlallah said. “Then, just as now, investors complained about the lack of alternatives to stocks and real estate and found themselves increasingly drawn into speculative trading.”"



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