Last year was a torrid one for Gulf investors, who saw $535bn of stock value evaporate from local markets. They now face a dramatically different financial landscape, but some may glimpse opportunities amid the detritus.
According to Markaz, a Kuwaiti investment bank, more than a third of companies in the Middle East and North Africa are now trading below book value. In the Gulf, the average price of equities has dropped to 1.3 times book value, from 3.7 times at the start of last year. Price to earnings ratios have slumped – sometimes to low single digits.
MSCI Barra is also considering including the Qatari, Kuwaiti and United Arab Emirates stock markets in its important emerging markets index this year, which could cause passive index-tracking money to flood in. Though economic growth forecasts for the Gulf have been slashed, no one is predicting any recessions.
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