GCC stock markets continued to rise in March and LHV Persian Gulf Fund recorded a result of +3.4% for the month
GCC stock markets continued to rise in March and LHV Persian Gulf Fund recorded a result of +3.4% for the month. This means that in total in Q1 2012 the fund’s performance was +12.4%. „MSCI GCC ex Saudi Arabia“ index rose at the same time by +2% (in euros, net). The fund’s Q1 performance was aided by 19% rises (in euros) in the stock markets of Saudi Arabia and Dubai that were also in the top 10 performing stock markets in the world at the end of Q1. The stock markets of Qatar, Oman and Kuwait have been much more modest with their quarterly performances in the range of +1% to -4%. It is important to note, however, that recently we’ve seen increase in the interest of foreign investors to the GCC region – factors supporting this have been high energy prices, decent macro data, the recovering UAE real estate market and relatively cheap stock prices. In March the majority of the fund’s investments paid out dividends. For example Commercial Bank of Qatar, Doha Bank and Oman Telecom offered dividend yields of 7%. Taking into account all the dividends the quarter’s best investments in local currency were from UAE Sorouh Real Estate (+45%), Aldar Properties (+40%) and First Gulf Bank (+32%), Qatar Fuel (+29%) and Qatar Telecom (+27%) from Qatar and from Saudi Arabia Advanced Petrochemical (+28%) and Samba Financial (+22%). But despite the rally in Q1 the fund’s investments continue to trade at cheap multiples, trading at just 8x-9x 2012 expected earnings and 1.3×-1.4x 2012 expected book value.