Gulf Stocks to Chase Frontier-Market Rally, HSBC Says

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Middle East stocks will likely start catching up with a world-beating rally by frontier markets after Dubai World announces a plan to restructure $26 billion in debt, said HSBC Holdings Plc’s Andrea Nannini.

“The trigger is going to be the announcement on the Dubai World restructuring,” Nannini, whose HSBC New Frontiers Fund has returned 71 percent in the past year, said in a telephone interview from London. “Whatever the plan is, that will probably be positive because it will give people clarity. That can really trigger the re-rating of the UAE market.”

Nannini predicted in October that frontier markets, which tend to be smaller or less developed than emerging markets, will outperform their larger peers this year. The MSCI Frontier Markets Index, tracking 25 countries from Argentina to Vietnam, has climbed 7.8 percent in 2010, outpacing a 1.6 percent gain in the MSCI Emerging Markets Index.