Beginning the year negatively by shedding 6% from the index and performing only better than Dubai, Qatar comes next in my 2010 GCC outlook review.
Reading the first couple of lines, one might think that investors should reverse all positions and exit the Doha SM. However, I would recommend doing the exact opposite; overweight Qatar. It has the highest expected GDP growth, strong government support, moderate inflation levels, and cheap valuations. Qatar is the hottest place to be in 2010!
With a 47% increase in LNG exports, Qatar is expected to record the highest GDP growth globally (14%). The growth of 14% surpasses all GCC nations, BRICS, emerging and developed markets. The increase in LNG exports and GDP growth will have a direct affect on banks and petrochemical companies and will definitely enlarge overall corporate bottom line earnings.
Qatar had one of the highest inflation levels of 17% in 2008; nevertheless, Qatar is expected to record an increase of 1% only in inflation.
Strong economic prospects accompanied with relatively low valuation calls for a strong buy. DSM expected 2010 P/E is at 9.8x, higher than Dubai and Kuwait only which both have valid reasons to justify such low P/E multiples. Moreover, Qatar has both high dividend yields and ROE of 4.5% and 18% respectively.
Qatar and Saudi Arabia both have a positive outlook.
Our next stops will be Dubai and Kuwait.
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