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.