(MENAFN- The Peninsula)Inclusion of Qatar in the MSCI Emerging markets index would aid in inflow of institutional money into the country's capital market, Kuwait Financial Centre (Markaz) noted in its latest report on "GCC Outlook for the second half of 2013".
The report that looks at the performance of the GCC countries in the first half of 2013 and provides an outlook for the rest of the year, for each individual country cited sustained high oil prices, expansive fiscal and accommodative monetary policies led to a strong rally in the first half of 2013.
All the GCC markets gained amply in the first half of 2013, reacting positively to high fiscal surpluses and infrastructure expenditures, strong comeback in the real estate market, and improvement in tourism sectors. GCC heavyweight Saudi Arabia ended the first half with a 10.2 percent gain in the Tadawul index. Qatar, Oman and Bahrain recorded healthy gains in the range of 10 percent to 12 percent in 1H13. Abu Dhabi (+36.9 percent) and Dubai (+40.7 percent) markets posted the highest gains this half, due to improvements in corporate profitability.
The GCC countries continued to invest heavily in the non-hydrocarbon sectors in a bid to diversify their economies. Construction and transport sector contracts worth over $39bn have been awarded for projects in the GCC, in the first half of 2013. Surge in lending and strong economic performance in hydrocarbon producing GCC countries, led to record performance in the Banking sector, in the first half of the year.
The highlight of the first half of the year was the long expected MSCI upgrade of UAE and Qatar to Emerging Market status. The move is likely to take effect in Q2 of 2014, with UAE accounting for 0.4 percent of the index and Qatar accounting for 0.45 percent.
Value traded continued its upswing in 2013 after bottoming out in 2010. Given the positive YoY growth in liquidity in 1H13, we have a Positive view for most GCC markets.
Subdued demand for oil globally and the resultant slowdown in production levels, is expected to slowdown real GDP growth for the GCC to 3.7 percent in 2013. Prolonged recession in Eurozone, weak recovery in the US, and slowdown in emerging market economies will lower commodity prices.
The report expects growth to be moderate in the region considering the political developments in Bahrain, Qatar and Kuwait. Inflation in GCC is also expected to be moderate in 2013, due to weak global economy. Expansionary fiscal policy in the form of large scale infrastructure projects, generous subsidies and state sponsored welfare schemes are expected to bring down the fiscal surpluses in GCC countries.
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