Morgan Stanley U-Turns on U.A.E. Equity Call, Cuts Qatar - Bloomberg:
It’s time to double-upgrade United Arab Emirates stocks amid early signs of a bottoming out in the property sector, Morgan Stanley analysts say, adding that investors should cut their exposure to Qatar.
U.A.E. shares are the most oversold of any markets in Eastern Europe, the Middle East and Africa, “led particularly by real estate,” according to analysts Marina Zavolock, Regiane Yamanari and Katherine Carpenter. After 17 months of structural decline, the forward dividend yield for U.A.E real estate is 7.4 percent, above its 11-year average, they wrote in a report. They highlighted a 75 percent discount to the average price for Emaar Properties PJSC. The company is the third biggest single weight in Dubai’s main gauge.
“We note various contrarian indicators pointing to a potential tactical, if not structural, turning point,” the analysts wrote in the report that upgrades U.A.E. shares to overweight. As Saudi Arabia’s inclusion to MSCI Inc.’s emerging markets category approaches, “U.A.E. may shift from a funding source to a cheaper alternative for investors wishing to cover significant MENA equities underweights.”
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