Foreign investor appetite grows for GCC listed companies

25 October 2010

Interest from Mena funds, emerging markets and hedge funds

Foreign institutional appetite for investing in GCC listed companies has picked up since the end of the summer, according to a leading regional industry head.

“Foreign institutional investors’ have been showing an increased interest in Gulf listed companies over the past couple of months,” said Christian Kern, head of Middle East and North Africa (Mena) equity research at the US’ JP Morgan, at MEED’s Middle East Capital Markets 2010 conference.

“We are seeing a particular interest from Mena funds, emerging market funds and hedge funds. And the good news is that it’s from a variety of markets - London, Frankfurt, the US, as well as domestic investors.”

Kern says there are about 50 Gulf listed companies today that foreign institutions are expressing an interest in. Investors are attracted by the strong price-to-earning (PE) valuations. 

“GCC companies are trading at PE valuations in the region of 7-8 points,” he says.

“I’m positive about the regional markets’ performance in 2011, whereas by contrast, we are currently seeing doubt creeping back into the developed markets.”

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