Nomura, one of Japan’s major industrial and financial conglomerate groupings, started coverage of the GCC equity markets with a constructive short and long-term view.

The brokerage said factors such as GCC's strong economic fundamentals, equity liquidity, increasing liberalisation of the financial sector and likely graduation of some GCC markets from frontier to emerging status should increase institutional participation.

"We believe that GCC's status as one of the easiest places to do business in the world (both developed and emerging) is not being properly acknowledged," the brokerage said in a note.

Educational standards and skills in GCC markets were ahead of emerging markets even though they trailed developed economies, it said.

Nomura said it is overweight on Qatar, Saudi Arabia and Kuwait.

However, it is neutrally weighted on Dubai due to a weak outlook offset by low values and did not have a compelling valuation case for Abu Dhabi.

The brokerage sees Saudi Arabia and Qatar as having the best longer-term fundamental outlook.

It said Kuwait is expected to have sustainably higher growth rates, rising labour participation and employment.

Even as GCC's nominal gross domestic product continues to be correlated to oil price changes, investors somewhat underestimate the economic diversification achieved by them, Nomura said. – TradeArabia News Service