Gulf Arab real estate and financial companies, set to benefit from higher infrastructure spending, are the most attractive bets in a region largely insulated from global financial turmoil, HSBC said on Wednesday.
HSBC Holding said it won a licence from the market regulator of the United Arab Emirates to set up a brokerage firm, the country's first managed by an international bank as foreign interest in the region grows.
"Investor interest in the Middle East is the highest it's been because of the international situation," said Paul Cooper, head of equities for Central Europe, Middle East and Africa at HSBC in London. "There is an unprecedented set of catalysts making the Middle East very interesting now."
Gulf markets including Kuwait – which has gained 12 per cent this year – have outperformed several emerging markets, which have been hit by fears of a US recession.
The Gulf region is benefiting from a five-fold increase in oil prices in the last six years and has more than $1 trillion of infrastructure projects in the pipeline.
"The focus, in terms of which sectors will benefit from monetary policy and infrastructure investment is really the financial and real estate sectors," Cooper said.
The main indexes of Saudi Arabia, Dubai and Abu Dhabi were the three worst performers among 82 tracked in 2006 by US stock market research Birinyi Associates. They have since recovered.
Oman's main index, the Gulf's best performer, has gained 18 per cent this year.
Gulf Arab governments are easing curbs on foreign capital, hoping more institutional investment will help reduce volatility in the markets, which are dominated by individual investors.
HSBC, which had previously traded for its clients through other companies, will offer direct access for institutions to the Dubai and Abu Dhabi stock exchanges starting this month, it said in a statement. It will offer retail brokerage later this year. (Reuters)
Gulf real estate, financial stocks attractive: HSBC