SHUAA Capital, the leading GCC financial services institution, 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 were 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; and 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 rose by nine points in September 2010, reaching 119, its highest level since March 2010. The SHUAA Capital Investor Confidence Indices for each individual GCC state shows that there has been an increase in every country except Bahrain.
In terms of confidence, Kuwait rose the most, up 15 points to 114, with the UAE a close second, up 13 points to 117. Saudi Arabia once again had the highest level of investor confidence in the GCC with an Index of 133 points. Qatar is just behind with 130 points after a six-point rise on June’s Index, whilst Oman is back in positive territory with its Index at 120 points this quarter. Meanwhile, Bahrain’s Index has slipped by five points but remains in positive territory at 106.
Sameer Al Ansari, Chief Executive Officer of SHUAA Capital, said:“The Dubai World restructuring agreement marked possibly the most significant moment for regional economies since November last year. The broader GCC markets and economies have been held back over the course of the past year, as investors have stood by for a clearer outcome surrounding the restructuring progress. As this latest Report shows, investor confidence is slowly returning and we expect it to continue over the course of the next few months.”
Oliver Schutzmann, author of the Investor Sentiment Report and Chief Communications Officer of SHUAA Capital, continued:“Driving investor confidence in the region are the recent successful bond issuances out of the UAE and Qatar and the Oil price which has gained almost $16 per barrel since 2009, equivalent to a 26% year-on-year increase.”
GCC’s current economic climate seen as much more robustLooking at the GCC as a whole, investor confidence towards current economic conditions swung back into positive territory with an on balance figure of 5.3%, following a 26.3% increase on June’s report. With the Dubai World restructuring agreement being such a significant piece of news, the biggest gainer this quarter was the UAE, which saw the largest rise for this section of the report. The Emirates’ on balance figure increased by 30.7%, rising to -8.8%. However, according to investors, the strongest economies in the region are Saudi Arabia (38.6%) and Qatar (36.8%), both making gains of over 10% quarter on quarter.
GCC economic outlook is strongThe respondents’ six-month economic outlook for the GCC economy as a whole rose 5.3%, reaching 31.6%. The UAE again improved markedly and was the GCC’s largest individual gainer, rising 18.4% to 31.6%. Similarly, Kuwait’s economy has a much more encouraging outlook, with its on balance figure rising 11.4% to 24.6%.
UAE exchanges seen as most undervaluedOverall, stock exchanges across the GCC were viewed as being undervalued, with the Abu Dhabi Stock Exchange seen as the most undervalued, with 40.4% on balance. The Dubai Financial Market ranked second, with 36.8%, whilst NASDAQ Dubai stood at 21.1%.
Stock prices to rise across most of GCCIn response to the question on ‘forecasting six months stock prices on the GCC exchanges’, investors overwhelmingly expected companies’ share prices to gain further. Specifically, the Abu Dhabi Stock Exchange and Saudi Stock Exchange (Tadawul) were mentioned as the two most likely to rise the furthest, up 11.4% and 20.2% respectively, reaching 35.1% and 43.9%.
Separately, investors were also asked a set of additional questions which did not contribute to the SHUAA Capital Investor Sentiment Index: how they feel about the profitability of publicly traded GCC companies, where they see the prices on a selection of commodities and currencies going and whether they plan on investing in the GCC in the next six months?
For the first time since the report was first published in March 2009, all company sectors are expected to see increases in profitability over the next six months. The main highlight is the Real Estate, Construction & Materials sector which were up 12.3% over the quarter and importantly the figure now stands at 1.8%, the first time it has recorded a positive on balance figure. In the other sectors, Transportation & Logistics (47.4%), Consumer & Retail (45.6%) and Pharmaceuticals (42.1%) are viewed as being the most profitable, with Telecoms Media & Technology also recording a strong on balance figure of 35.1%.