Middle East fund managers are willing to buy most of the region's main equity markets on dips, believing corporate earnings and balance sheets will continue improving this year, a monthly Reuters survey shows.
Markets retreated early this month as retail investors rushed to take profits during the worst of the geopolitical uncertainty over Ukraine. Dubai's bourse fell 6.7 percent from its peak close to its trough. Qatar's bourse dropped 3.8 percent.
But many fund managers said they did not view the pull-back as a sign of long-term vulnerability in the markets, but as an opportunity created by natural volatility.
"We welcomed the panic selling in Qatari and UAE equities during March," said Akber Khan, director of asset management at Qatar's Al Rayan Investment.
"It offered attractive entry points for a number of companies with strong market positions, solid balance sheets and impressive cash flows."
The survey of 15 leading investment managers, conducted over the past 10 days, found 47 percent of them expected to raise their equity allocations to the Middle East over the next three months, while only 13 percent expected to reduce them.
That was down slightly from the results of last month's survey, when 53 percent - a four-month high - expected to raise their equity allocations and none expected to reduce them.
"I expect markets to do well as local economic catalysts are solid and corporate performance remains strong," said John Sfakianakis, chief investment strategist at Saudi Arabian investment firm MASIC.
The survey showed a significant shift in fund managers' view of fixed income, however, after U.S. Federal Reserve Chair Janet Yellen made comments last week which were interpreted to mean interest rate hikes could come in about a year's time, sooner than anticipated.
Only 7 percent of managers expect to increase their allocations to Middle East fixed income in the next three months, while 20 percent expect to cut them. That compares with a positive ratio of 20 percent and a negative one of 13 percent in last month's survey.
Article continued on next page...