The recent rally in the region’s stock markets has boosted interest in Gulf shares, but a large scale return of international investors won’t happen until oil reaches $75 per barrel, Shuaa Capital’s chairman said on Sunday.

The Dubai stock market has bottomed out but shares may plateau this summer, Majid Al Ghurair told Arabian Business on the sidelines of a press conference in Dubai.

“Whoever is buying today can not go wrong. Many investors are identifying that: they can buy shares, sit on them a little bit, and the market is going to come back again,” he said.

The Dubai Financial Market’s (DFM) main measure has gained 26 percent since early May and is up about 24 percent since the beginning of the year.

However, Al Ghurair cautioned that the current rally is unlikely to be sustained over the traditionally quiet summer months.

“This rally will not continue, but I think after summer it will pick up again, especially if confidence returns to the market and the oil price [continues] climbing up, slowly and gradually.”

The UAE market is still seen as an oil play by most international investors and an oil price of $75 percent per barrel by the end of the year would spark an inflow of international funds into GCC markets, he said.

Shuaa Capital recently held a conference in London where many investors expressed renewed interest in the Gulf region.

“We had a lot of international investors who feel it’s time to come back into the market,” Al Ghurair said.

Bank of America Merrill Lynch said last week that Dubai was the best “trade” in the region but that Saudi Arabia remained the best investment.

“Hard to find much that has underperformed US banks in past 3 years. But Dubai has, thanks to its real estate and oil bust. It's now cheap, unloved and the combo of oil over $60 per barrel and improving credit spreads are powerful drivers,” a team of analysts wrote.

But vast oil reserves, a larger population and lower leverage makes Saudi a better long term investment, it added.

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