Reuters HK – Gulf utility stocks should be approached with caution given their need for high capital investment in the next few years and limited pricing power, the manager of the Evolvence MENA Hedge Fund said on Wednesday.

But shares of Gulf banks offer some of the region’s best investment opportunities given high earnings growth and their leverage to booming local economies, said Kamal Fayad, the Dubai-based manager of the $50 million (28 million pounds) fund.

"We are pretty bullish on financials in the region … the spreads are pretty high," he told Reuters in an interview in Hong Kong, where he was attending a hedge fund conference.

"Just look at their results the last couple of years. Their results are increasing by an average of 20 to 30 percent."

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