A Catalyst for Implementation of the Economic Investment Plan We believe that Dubai’s Expo 2020 win will lead to an acceleration in the implementation of the investment plan. This is linked to the wider plans to increase capacity in the core sectors of the economy, and beyond the Expo site and associated infrastructure. We estimate that the successful bid could add 0.5-1.0 percentage points (pp) to UAE’s real GDP growth in the next few years, accelerating closer to the event, as construction activity picks up and with the event itself. We currently estimate (ie, without factoring in the Expo win) real non-GDP growth of 4.5-5.0% for the next two years. Economic Risks have to be Managed; Positive Regulatory Reforms However, we believe that an acceleration of the investment programme increases some risks, not only to Dubai’s debt load but also to inflation as a result of population growth. We also see a possibility of increased speculative activity following Dubai’s Expo 2020 award, coming on the back of an already sharp rise in real estate rental and purchase prices in 2013. We view the introduction of a number of measures in recent months to manage systemic risks in the banking and real estate sector as positive in supporting a sustained recovery. Expo Win is Priced in, Expect Short Rally Followed by Profit Taking We believe that an Expo 2020 win for Dubai was largely priced in, with Dubai trading at 13.6x 2013 P/E, and the market up 79% YTD. Recent market action had suggested greater uncertainty about an Expo win, and we may see some short-term strength in UAE stock markets (especially in Dubai) over the next few days. However, we believe that this is likely to be followed by profit-taking in which investors sell the fact, particularly after a year of exceptional gains for the market.   Banks Our Preferred Play For Expo and Cyclical Recovery Regardless of the long-run impact of the Expo win, it is clear that Dubai’s economy is in the middle of a strong cyclical upswing that is supportive for earnings surprises. The Expo win offers additional support for credit growth – which is already beginning to accelerate - and we reiterate our view that banks are the best play on the Expo and Dubai’s recovery – we prefer FGB, DIB and ADCB). Contractors and Emaar are also likely to enjoy strong revenue growth in the medium term, but there are risks to margins should the developmental motive take precedence over profit maximisation, we believe. Among contractors, we prefer DSI over Arabtec.