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20 April 2024

Property stocks top 'bargain' list

By Bhaskar Raj


Global investment banks and advisers continue to paint a rosy picture of the Gulf stock markets, particularly the UAE.
Merrill Lynch, one of the world’s leading financial management and advisory companies, termed them “bargains in the bazaar – remain bullish for 2008”.

The agency said the region is well insulated from a global slowdown, with the accumulation of foreign assets acting as a cushion against lower oil prices.

The current investment plans of the GCC economies are sustainable at an oil price of $40-$50 a barrel, the estimated breakeven oil price for budget expenditure.

“A moderation of oil prices in the near term, in our view, will dampen investor sentiment but is unlikely to disrupt real economic growth,” the report said. Merrill Lynch is particularly positive on stocks with exposure to the infrastructure, real estate and capital market development across the region.

“Our top picks in the region are Aldar, EFG-Hermes, Emaar Properties, Gulf Finance House and Telecom Egypt,” the report added.
Similar sentiment is expressed by Goldman Sachs, which said in its report that Emaar is a good source of opportunity, adding: “We believe Emaar’s guidance on 2008 revenue and earnings growth has contributed to an unwarranted sell-off in the stock, leaving it at a highly attractive valuation in absolute terms and relative to peers.”

Meanwhile, the Abu Dhabi bourse is expected to outperform Dubai this week, thanks to better valuations and an ongoing hunger for the capital’s real estate stocks.