Against the lingering backdrop of an overextended China (and by extension, Brazil et al.) and Friday’s shockingly moribund U.S. NFP report (as Zero Hedge tweeted, ‘less than six weeks until Jackson Hole…’) now is the time for portfolio managers to truly discriminate among emerging and frontier markets and specifically consider reducing exposure to high-beta names that are likely all-too uncomfortably correlated to the kick-the-can, er, ‘risk on’ trade.  Per Barclays, Qatar ’20 and ’30 sovereigns, for instance, as well as quasi-sovereign corporate names like Rasgas and Qtel are likely to benefit in the near-term not only from their hitherto underperformance (~20bp spread widening YTD) but from ever-improving macro fundamentals (21.5% y/y GDP, CA surplus 25.3%/GDP in June, a seemingly perpetually subdued, GCC-low 2% annualized headline inflation rate projected for 2011 and GCC-leading annualized export growth) as well as the implementation of the recently announced National Development Strategy 2011-16 ($USD226bn budget) that analysts expect will “boost the non-oil sector activities, particularly on the investment side.”  Furthermore fiscal stimulus in Qatar (money supply growth up 29.9% y/y in April versus GCC average of 17.3%) and its corresponding deposit growth (up 18.2% y/y) remains muted and quite manageable in the context of a budget breakeven oil price (now ~$40/b) more than half that of say, Saudi Arabia, while credit trends (bank credit to the private sector in Qatar expanded by 5% y/y in April versus a GCC forecast of 8.6% y/y in 2011 as post Arab-Spring liquidity mean reverts) also look positive.

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