The fund’s NAV up by +0.6 percent in December
In December LHV Persian Gulf Fund gained +0.6% and for the whole 2011 the fund’s performance was -2.3%. Despite the fact that in 2011 GCC-countries showed strong economic growth and companies increased their profits, we witnessed stock prices moving sideways. As a result the valuations of the investments that we’ve made in LHV Persian Gulf Fund have become even more attractive. In addition to inexpensive valuations our investments also offer strong dividend yields. For example expected dividend yields on 2011 earnings on the companies in the fund are as follows – Oman Telecom 7.6%, Commercial Bank of Qatar 7.6%, Doha Bank 7.1%, Industries Qatar 5.4%, Qatar Islamic Bank 5.4%, First Gulf Bank 4.4%, Saudi Basic Industries 4.3% etc.
In the end of 2011 we also started investing into Saudi Arabia by buying Samba Financial, Almarai and Saudi Basic Industries. Samba Financial was named as the bank of the year in 2011 in Saudi Arabia by the financial magazine “Banker”, Almarai is one of the world’s largest integrated dairy companies and Saudi Basic Industries is a leading industrial company in the GCC-region. Saudi Arabia’s 2012 budget has been drawn up on assumptions of oil price of $55-$60/barrel and the budget should stay in surplus even if oil production should decline by 15% and should oil prices at the same time decline by 40%.
In December Morningstar raised the rating of LHV Persian Gulf Fund in the category of “Africa and Middle-East” equity funds to the maximum of 5-stars.