GCC equity and bond markets still well bid in spite of EM turmoil; portfolio diversification via thematic investing is a valuable option; CIO-Office investment themes performed well on different times frames; IMF warns about risks to global growth
The buoyant mood continues to propel local markets, as GCC equities close the week on a positive note and bond spreads remain tight in spite of the prolonged turmoil in
Although we like the GCC region for the medium to long term due to its strong fundamentals, we continue to advocate diversification. Valuations for
Diversification can be achieved by investing not only in different geographies – for instance Qatari and Saudi equities are trading at cheaper multiples than
Most of the themes suggested in 2013 in our quarterly publication have performed quite well on different time frames: in pecking order on a 3 months basis from MENA equities, European financials, global resources stocks, US small & mid-caps, to MENA fixed income and US high-yielding bonds; again in pecking order but on a 1 year basis from MENA equities, Japanese stocks, US industrials, European financials, to US high-yielding bonds and MENA fixed income.
The bulk of our themes remain unchanged for now: we prefer equities and credit to government bonds, as global growth is expected to pick up significantly in 2014; we prefer the US and
We are also keen to point out that we continue to look for relative value opportunities in the region and advise accordingly: our last conviction trade, Kuwait Projects 5 year maturity has been among the top performers, now trading at about 103; while the Slovenia sovereigns – new 5 and 10 year maturities, initiated last week – outperformed its
In any case investors are well reminded that The
The report was prepared for the G-20 meeting – which took place
We think investors are better off being aware of the IMF warning and should avoid placing all of their eggs in one basket, or all of their money in one single theme.
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