Persian Gulf Stocks Beat Emerging Markets on Valuations, Spending Plans - Bloomberg

Persian Gulf shares outperformed emerging markets for a second quarter as Dubai stocks reached the cheapest levels in six months and government spending in the region spurred economic growth.

The Bloomberg GCC 200 Index (BGCC200) of regional shares retreated 6.5 percent and Dubai’s DFM General Index (DFMGI) slipped 5.6 percent in the period amid concern Europe’s sovereign-debt crisis is worsening. That compares with a 23 percent slump for the MSCI Emerging Markets Index. Dubai’s measure is valued at 0.7 times book value, or assets minus liabilities, while developing nations shares trade at 1.5 times.

“Before the selloff in global markets, equity prices and valuations in the region were already at attractive levels due to political tensions” earlier this year, said Yong Wei Lee, who helps oversee about $1.2 billion as a senior fund manager at Emirates NBD Asset Management in Dubai. Some Gulf nations have “accumulated large fiscal reserves” that “support their large infrastructure spending plans, which provides a cushion from the economic slowdown in developed markets.”

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