UAE offers best risk/reward: US bank

The UAE offers best risk/reward among the Frontier Markets, according to a study released by the US bank on Wednesday.

A BofA Merrill Lynch report said UAE along with “Saudi Arabia, Nigeria, Kazakhstan, Qatar and Iraq provide the best risk/reward among the bigger (frontier) markets.”

Stock markets, property prices, trade and tourism and other major business indicators fared well in 2013 and started 2014 also on high note as they recorded positive growth in the first two months.

The report rates UAE high on macro and political risk front. “The top five countries – Slovenia, Qatar, Lithuania, Estonia and the UAE – have in common relatively good institutions, lack of violence and high income levels,” it said.

Bofa Merrill Lynch said Iraq, Kazakhstan, Qatar and Nigeria are set to achieve the highest rates of GDP growth, at about 5.5-7%. Egypt, Kuwait, Saudi Arabia and the UAE are lagging somewhat, with about 3-4% GDP growth expected on average in the next five years.

It said the UAE recovery from the 2009 crisis is helped by still-high oil prices, support from the external factors and accommodative monetary policy, a gradually fading drag from the real estate sector, progress on GRE restructuring and a mild fiscal consolidation drive. “The real estate market has bottomed and is undergoing a V-shaped recovery in some segments,” the US bank said in its report.

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