Top bankers predict another tough year for GCC markets

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Top regional executives today predicted another tough year for regional capital markets as they gathered in Dubai to discuss the financial climate at a Thomson Reuters Middle East Investment Banking Leaders Roundtable.

Thomson Reuters recently released a review of the Middle East investment banking industry, covering the region’s debt and equity capital markets.  It showed investment banking and adviser fees down 46%; mergers and acquisitions down 40%; equity issues down 81%; loans down 81.5%; debt issues up 151%.

“We still have a lot of uncertainty and I don’t expect 2010 to be better than  2009 – but I hope I am wrong,” said Ziad Makhzoumi, Chief Financial Officer, Arabtec Holding, the United Arab Emirates' largest contractor by market value currently discussing a proposed merger with Abu Dhabi’s Aabar Investments.

A “flight to quality” was predicted by Steve Perry, Managing Director and Head of Project Finance Syndications, Middle East and North Africa, for Standard Chartered Bank. He said though Dubai still had to resolve issues, he was generally optimistic about prospects for Abu Dhabi, Qatar and Saudi Arabia.

Similarly, Ali A. Al-Gwaiz, Chief Executive Officer of Riyad Capital, was cautious about prospects for Saudi Arabia. “I think the Saudi Arabian economy has a better chance to do even better in 2010,” he added.

For Peter Fort, Executive Director Mergers and Acquisitions, Middle East and North Africa for Morgan Stanley, the issues of transparency and government regulation was crucial for the region’s future. “More transparency and regulation put in place will spur activity in the longer term,” he added.

In the Thomson Reuters fourth quarter 2009 review of the Middle East investment banking industry, Standard Chartered topped the league in Middle East loan ranking with eight deals worth a total of US$1.91 billion; Riyad Bank led equity capital markets by volume; and Morgan Stanley topped the ranking for mergers and acquisitions advising on Middle East deals worth US$16.3 billion.

Today’s roundtable will be published in an upcoming International Financing Review from Thomson Reuters. The roundtable was moderated by Keith Mullin, Editor in Chief of International Financing Review, Thomson Reuters. 

“There is clearly appetite to do deals in the region but a lot of obstacles remain, including the return of underwriting to the loan market and more realistic valuations, both of which came up at the roundtable, Mr Mullin said.