The GCC stock markets are likely to continue to outperform other markets as they are largely insulated from the financial turmoil in the US and Europe, according to Securities and Investment Company (Sico) principal Shakeel Sarwar.

He said that with price earnings ratios at between 10 to 12 Bahrain remained the cheapest market in the region but other GCC countries would grow strongly and they were now attracting more interest from international investors.

"Five years ago it was very difficult to get information out of GCC companies but that culture is changing and it is now possible to do in depth research and meet the management of companies," he pointed out.

"Disclosure levels have improved but compared to the West there is still room for improvement. The important thing is they are moving in the right direction."

He was speaking as the Bahrain-based regionally-focused investment bank reported its GCC equity funds outperformed market indices despite the regional uncertainties last year and global turbulence caused by the credit crisis.

Sico's funds include the Khaleej Equity Fund, a flagship fund, which invests principally in equity securities listed across the GCC stock markets.

The fund, which was one of the first Gulf-based funds to be awarded an 'A' rating by Standard and Poor's last year, saw a 43.9 per cent return for the year and is already up 10 per cent this year.

The Sico Selected Securities Fund, the only Bahrain-dedicated mutual fund, invests principally in equity and debt securities listed, or which are expected to be listed, on the Bahrain Stock Exchange. The fund delivered a 31.4 per cent return for the year.

Sico's Gulf Equity Fund, which invests in listed securities across the GCC stock markets with the exception of the Saudi Arabian delivered a 37.2 per cent return over 12 months continuing its market beating performance since its inception in March 2006.

The firm's newest fund, the Sico Arab Financial Fund, seeks long-term capital appreciation by investing primarily in financial sector equities in the GCC and Middle East and North Africa (Mena) regions. Since its launch in August last year, the fund generated a 20.7 per cent return to the end of December last year.

Sico attributes this strong performance to its conservative asset allocation and bottom-up driven stock picking strategy.

At the same time, SICO also adopts a top down approach to risk management by closely monitoring company, country and sector exposures.

Portfolio managers focus on identifying companies that are fundamentally strong, and that are trading at less than their fair values.

"Sico's investment philosophy and strategies have enabled us to deliver strong out performance for our clients during last year, a year which witnessed significant market turmoil due to the global credit crisis," said chief executive officer Anthony C Malis.

"We believe the GCC and Mena regions offer the potential for superior returns for investors during this year, as we forecast in our recent GCC market overview research.

"The combination of our regional insight and the quality of our research is helping Sico to deliver consistent returns for investors, and these factors will continue to form the keystones to our investment approach with highly selective stock picking to deliver above average returns to investors," he said.

Sico is an investment bank offering a selective range of services, including asset management, brokerage, corporate finance and market-making, on a regional basis and with a particular emphasis on Bahrain.-TradeArabia News Service