The fourth best performer is Kuwait, with a gain of 23% year-to-date. The country is
expected to finish 2013 with growth of 4.5% before accelerating to 5% growth in
2014. The stock index has been boosted by shares of small cap companies as well
as plans to continue upgrading their infrastructure system. The Kuwait stock
market recently traded at the best level in nearly 3 years.
The second top performer in 2013 is the United Arab Emirates (UAE) with a gain of 28%. The country
is expected to grow by 3.3% in 2013 and tick up to 3.4% one year later. A boost
to the country’s economy and stock market has been a rebound in the real estate
market after a drop during the 2008 global recession.
So how does a US investor play the surge in the Middle East
stock market prices?
One option is the WisdomTree Middle East Dividend Fund (GULF).
The ETF invests in the UAE (35%), Qatar (28%), Kuwait (18%), Morocco (9%),
Egypt (6%), Oman (3%), and Jordan (1%). The sectors most heavily weighted are
the financials (48%), telecom services (31%), and industrials (17%).
Along with the Kuwait and UAE as top countries, Qatar also makes up a sizable
portion of the allocation. Qatar is expected to grow by 5.0% in both 2013 and
2014 as it plans to spend $140 billion to upgrade its infrastructure before
they host the 2022 World Cup soccer tournament.
The ETF is currently
up 18% in 2013 and is trading at the best level since 2008. On top of strong
capital gains are the quarterly dividend payouts to investors. The payouts can
be erratic at best, however the last quarterly dividend payout was $0.21/share.
Annualized out this is a yield of 4.8%
if the dividend was to remain constant for the next 3 quarters and based on
today’s price of $17.60.
The chart below shows the 1-year performance of GULF (+16%).
I would look for a pullback in the $17
area for an opportunity to buy at a more attractive entry price.
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