August 2007
Middle East equity research poll 2007: Regional research starts to blossom
Only four years ago, the kind of research familiar to more developed capital markets was almost unknown in the Middle East. However, the quality of information available to investors is improving rapidly as global banks establish footholds. But Saudi Arabia, the region’s biggest market, has been left behind. Dominic O’Neill reports.
Middle East equity research poll 2007: Award Winners
AT THE BEGINNING of May, stocks on the Bourse de Casablanca were trading on an average of 22 times earnings, the highest P/E ratio in the region. It was the end of a long bull run. But even as prices began to fall, most of the research in the country continued to be overwhelmingly positive about company prospects, and in some cases was even more positive than before.
Morocco, with only a handful of local banks producing at best acceptable research, is perhaps a far-flung example. Even so, throughout the Middle East and North Africa region, truly balanced research of the kind expected in more established financial centres is still elusive. "You hardly ever see ‘sell’ recommendations. Any time you see a rating of ‘hold’, that is a sort of nice way to say ‘sell’. Most investors understand that," says Khaled Majeed, founder and investment manager of London-based Mena Capital, a fund that invests solely in the Middle East and North Africa region. According to Raed Zawaideh, a trader at state-owned government fund the Abu Dhabi Investment Authority (Adia), less than 5% of research in the region is negative. When markets in the Middle East start to plunge, as many of them did in 2005/06, much of the research simply dries up, says Zawaideh.
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