Qatar stocks offer best value in Gulf - analysts

MARKET ADVANTAGE: All Gulf stocks are 'very cheap' at present but Qatar offers best value, say analysts. (Getty Images)

Gulf stocks are currently “very cheap”, with Qatar offering the best value for money, Merrill Lynch has said.

Government support to the financial sector and fiscal stimulus will underpin Gulf economies, but the asset quality of regional banks remains an area of concern, Merrill said.

The MSCI Gulf ex Saudi index is trading at a 29 percent discount to emerging markets and has lagged a rally in the oil dependant Russian market.

But the bank cautioned that investors need to be selective, noting that the breakeven price of oil for GCC budgets is around $60 per barrel.

Qatar’s projected five percent growth in GDP this year makes it the strongest play in the region, a team of analysts wrote in a research note.

Trading at 9.6 times earnings, Saudi shares are the most expensive market in the Gulf, but this reflects “huge” growth potential, they added.

Merrill’s top stock pick in the kingdom is petrochemical giant SABIC.

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