SHUAA Capital, the region’s leading financial services institution, today issued its January 2010 GCC Investor Sentiment Report, the only report of its kind for the Gulf markets. The report draws together the submissions from international and regional institutional investors to formulate the SHUAA GCC Investor Confidence Index. The Index has been designed to provide the investment community with a benchmark of investor confidence for GCC countries and tracks changes in investor behaviour over time.
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Commenting on the Index findings <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Oliver Schutzmann, Chief Communications Officer of SHUAA Capital and Author of the Investor Sentiment Report, said:
“Following an improvement of the GCC Investor Confidence Index at the end of 2009, it decreased slightly by 2.4 points to 114.5 in January 2010. December’s special investor sentiment report reflected the impact of the decision to repay the Nakheel Sukuk on time, resulting in a jump in the Index. However, the UAE Index has subsequently lost 12.8 points to 96.1 as investors have become increasingly uncertain towards the economic outlook on the UAE economy. Saudi Arabia was the only country this month to see its Index gain ground, as it rose 6.6 points to 142.4. Elsewhere, despite making a 5.9 point loss on December, Qatar’s index remained in a strong position at 130.8 points.
Regarding investor sentiment towards the GCC markets, Oliver Schutzmann commented:
“Driving much of this month’s GCC Index decline was primarily the bearish six month stock price outlook of participants for all GCC countries. The balance[1] of respondents figures for stock price outlook fell by 14.8% for GCC stock markets. Leading the GCC decline were all three UAE markets - Abu Dhabi Stock Market, Dubai Financial Market and NASDAQ Dubai - all saw confidence fall by over 25%.
“Furthermore, this month we asked investors which stock markets they expected to recover in 2010, they responded positively towards the Abu Dhabi (21%), Saudi Arabian (51%) and Qatari (37%) stock indices while uncertainty for other markets outweighed positive sentiment.
Oliver Schutzmann discussed the performance of regional stock markets:
“Investors are increasingly bearish on Western markets this month and GCC markets are seen to be much more attractive over the next six months. The FT-SE, Eurostoxx 50 and Dow Jones 30 all saw their on balance figures drop by over 30% this month to -30%, -40% and -30% respectively, indicating that they are seen as significantly overvalued. Comparatively, the Saudi Stock Exchange gained 3.4% on last month, rising to 26% on balance, while all other markets in the GCC, except the Kuwait and the Dubai Financial Market, at -12% and -2% respectively, remained in positive territory.”
Finally, Oliver Schutzmann highlighted the six month outlook on the profitability of GCC industry sectors:
All sectors, apart from Real Estate, are expected to record increases in their profitability over the next six months according to survey participants. Telecoms, Media & Technology (TMT) are still expected to be the most profitable, with 35% on balance. Pharmaceuticals saw a strong gain of 11.9% on last month as they moved to 28% on balance. Making significant progress this month were the banks & other financial institutions 17.2%, recording an balance figure for January 2010 of 14%. Heavy industries moved into positive territory this month at 7%, while the real estate, construction & materials industry made up a very encouraging 20% on last month, although still remaining in negative territory.
[1]Balance: The balance of respondents indicates, for instance, the difference between the percentage share of investors that are positive and the share of investors that are negative on overall economic conditions.
