Equities investment outlook: More consistent returns possible in MENA | ZAWYA MENA Edition

Equities investment outlook: More consistent returns possible in MENA | ZAWYA MENA Edition:

MENA equities should provide good investment opportunities as key merger and consolidation activities have increased the potential size of the market and more consistent returns seem possible going forward, an investment outlook by First Abu Dhabi Bank on Sunday noted. 

“Risk-adjusted returns are likely to be more consistent following a correction in the second and third quarter of 2019, given that valuations in some markets in the region are now closer to historically low levels,” according to Global Investment Outlook 2020.

The economic backdrop is also improving with Saudi Arabia and the UAE increasing government spending. Oil prices are likely to remain stable, and the geopolitical backdrop is improving, with signs that strains among some of the countries in the Gulf are easing.

“Henceforward the pricing of MENA equity securities should revert to fundamentals, rather than being driven principally by index tracking-related passive inflows, which are now abating. This is an improved environment for stock picking, as investors will be able to operate in more normal markets.”