Dubai (Bloomberg): It’s been a one-two punch for Gulf markets this year.
First came the flare-up when the US assassinated one of Iran’s top generals. Now, the region’s stocks and bonds are suffering the economic fallout from the coronavirus.
Valuations in the six-nation Gulf Cooperation Council were stretched heading into 2020, making them vulnerable to a turn in sentiment toward riskier assets, according to Tellimer, a brokerage focusing on frontier markets. The virus-triggered plunge in oil threatens to crimp revenues for the region, while trade and tourism could also be hit.
“Across the GCC, growth remains quite anaemic,” said Hasnain Malik, Tellimer’s Dubai-based head of equity strategy. “I don’t see any of the GCC markets as compelling for a global investor.”
While stocks in Oman and Dubai are cheaper, they’re “riskier,” said Malik. Oman is the most exposed regionally to the slump in oil given the higher price needed for the sultanate to balance its budget and the lack of guarantees that Arab nations would rescue it from a crisis, he said.
Dubai is grappling with oversupply in its property market. Flight disruptions to China will also affect the UAE’s transport and logistics sector, which accounts for about 8 per cent of the nation’s non-oil economy, according to lender Emirates NBD.