Bank Sarasin launches GCC equity fund

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POTENTIAL TAP: GCC comprises Saudi Arabia, UAE, Kuwait, Qatar, Bahrain and Oman.

Bank Sarasin's Dubai-based asset management firm launched on Monday an equity fund worth $100 million to target Gulf Arab bourses which it believes are undervalued.

Sarasin-Alpen & Partners said it aimed to raise an initial $100 million in the first quarter of 2009 from both international and regional investors, which it would invest in the markets of the six-member Gulf Cooperation Council (GCC).

The GCC comprises Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.

"The economic outlook, government finance and regional stability in the GCC are much better than in the developed world and than in some of the other emerging markets," said Paul Cooper, senior executive officer at Sarasin-Alpen & Partners.

"Equity markets here are very cheap ... there is clearly value upside in the markets today", he said.

The region's real estate and banking sectors had been particularly badly hit by the global downturn, Cooper said.

"Inevitably these large sectors are trading at very stressed levels but so are the petrochemical companies, some of which have lost half of the replacement value of their assets," he said.

Markets in Saudi Arabia, Kuwait and the United Arab Emirates would see the sharpest rebound in the short-term, having suffered some of the steepest losses as the financial crisis hit the region's bourses, Cooper said.

Dubai's main index DFGMI lost more than 70 percent of its value in 2008, while Kuwait's benchmark .KWSE lost nearly 40 percent.

The bank was also planning to launch a Middle East and North Africa fund, although a date for this had not yet been decided, Cooper said. (Reuters)

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