SHUAA Capital today issued its GCC Investor Sentiment Report, the only report of its kind for the Gulf markets. The SHUAA Capital GCC Investor Confidence Index and its sub-indices for all six GCC countries are derived from an equal weighting of responses to four questions of the GCC Investor Sentiment Survey: current view and six months outlook on economic conditions, current view and six month outlook on equity market valuations. The Index and all sub-indices have a range between 0 and 200. A number greater than 100 represents positive sentiment while a number lower than 100 represents negative sentiment.
The SHUAA Capital GCC Investor Sentiment Index dipped by 5.7 points in May, although is still in positive territory at 107.4. In what was a difficult month for the global economy, May saw all SHUAA Capital GCC Investor Sentiment Indices decline. Leading the slide was the UAE Index which slipped 14.7 points to 104.7. Qatar also recorded a significant decline as it dropped from 131.9 points in April to 121.9 points in this latest survey.
Mr. Sameer Al Ansari, Chief Executive Officer of SHUAA Capital commented on the results: “While we saw progress made on the Dubai World debt situation in May, with the largest banks agreeing to the terms of the restructuring agreement, there are still a number of other issues restricting investor confidence. Europe is going through an economic crisis at the moment and with GCC economies heavily influenced by the West, it comes as no surprise that regional confidence has been dampened.”
Oman and Saudi Arabia sustained moderate declines as they fell to 107.3 points and 123.6 points respectively. Meanwhile, the Kuwait and Bahrain Indices moved below the 100 point threshold indicating overall negative sentiment towards those economies. After two months of improving sentiment towards Kuwait and Bahrain, their respective Indices are now at 97.9 points and 98.6 points.
One of the main components of the SHUAA Capital GCC Investor Sentiment Index is investors’ six month outlook for economic conditions in the region which remains healthy at 16.7% on balance . Furthermore, all GCC markets remained in positive territory when looked at individually; Qatar (33.3%), Saudi Arabia (31.9%), UAE (9.7%), Oman (18.1%), Kuwait (6.9%) and Bahrain (8.3%). This comes despite declines to every market being surveyed on April’s survey. Internationally, Global Emerging Markets dropped 24% on April to 13.9% while BRIC countries slipped to 12.5% on balance.
Mr. Oliver Schutzmann, Author of the Investor Sentiment Report and Chief Communications Officer of SHUAA Capital, commented: “Despite a decline in the SHUAA Capital GCC Investor Sentiment Index, the six-month outlook for economic conditions in the region, according to investors surveyed, very much indicates that the situation is set to improve.”
Another component of the SHUAA Capital GCC Investor Sentiment Index is investors’ view of current economic conditions. Investors have indicated that the GCC’s current economic condition is being weighed down by Kuwait, Bahrain and the UAE which recorded on balance figures of -29.2%, -25% and -22.2% respectively. As a result, the GCC’s on balance figure has fallen 3.5% to -13.9%. Comparatively, Global Emerging Markets and BRIC countries both made significant losses on their on balance figures for current economic conditions this month of 25.7% and 20.1% as they moved to -22.2% and 9.7% respectively.
Elsewhere in the region on current economic conditions, Qatar declined 9.8% on balance to 26.4%. Saudi Arabia and Oman declined a similar amount and moved to 13.9% and -8.3% respectively.
Looking ahead six months with regards to stock markets, investors expect the Abu Dhabi Stock Exchange and Saudi Stock Exchange (Tadawul) to rise the most, with on balance figures of 27.8% and 34.7% respectively. Comparatively, European stock markets are expected to struggle and decline in price, with Eurostoxx 50 and FT-SE recording on balance figures of -6.9% and -4.2% in this latest report. Meanwhile, investors have indicated that the Dow Jones 30 companies will see their stock prices increase with an on balance figure of 15.3%.
Mr. Oliver Schutzmann discussed trading activity: “Another positive sign on the route towards economic recovery was this month’s special question, which asked investors whether they believed trading activity would increase over the next six months across a number of exchanges. Survey participants indicated that they thought most regional markets would see an increase in trading volumes.”
On trading activity outlook, the Saudi Stock Exchange led the way with 25% on balance, suggesting activity is set to increase. Other exchanges with similar figures are the Abu Dhabi Stock Exchange and the Dow Jones 30, both with 23.6% on balance. Elsewhere, the Dubai Financial Market, the FT-SE and Doha Stock Market had on balance figures between 9% and 12.5%. Meanwhile, the Bahrain Stock Market, NASDAQ Dubai, Oman Stock Exchange and Kuwait Stock Exchange are all expected to see declining volumes over the next six months.