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Shuaa Reports Weakness in Investor Confidence on GCC

DUBAI — Dubai-based investment bank Shuaa Capital said on Monday that its GCC Investor Confidence Index posted a decline in January, reflecting increasing uncertainty about the region’s economic conditions.

Shuaa’s “GCC Investor Sentiment Report” showed the index slipping 2.4 points to 114.5, after a second half recovery during December 2009. The report said that the December jump in the index was due to a decision by the Government of Dubai to go ahead with a Nakheel Sukuk payment on time.

“However, the UAE Index has subsequently dived 12.8 points to 96.1, weighing down the GCC as a whole, as investors have become increasingly uncertain towards Dubai’s current economic state,” the report said.

SHUAA Capital conducts a monthly survey looking at the current and future expectations of the investment community towards the GCC region.

The report said 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 remained in a strong position at 130.8 points. There was further deterioration in sentiment towards Kuwait, which slipped further into sub 100 point territory, the threshold for positive and negative investor sentiment, as it fell from 95.8 points last month to 87.2 points this month. Meanwhile, there was little change for Oman and Bahrain, as their respective Indices fell 1.8 and 0.4 points in January resulting in Indices of 109.9 and 97.1 points.

Driving much of this month’s GCC Index decline was primarily the bearish attitude of survey participants towards the six month stock price outlook for all of the GCC countries. The balance of respondents’ figures for stock price outlook fell by an average of 14.8 per cent for GCC stock markets. Leading the decline were all three UAE markets ? Abu Dhabi Stock Market, Dubai Financial Market and the NASDAQ Dubai, all saw their on balance figures fall by over 25 per cent.

The six month investor outlook for the GCC economies remains in healthy positive territory, gaining 2.7 per cent on balance with 35 per cent of respondents saying that economic conditions will improve. Saudi Arabia continues to lead the way in the region, with an on balance figure of 56 per cent as investors seem very confident that the Kingdom will make strong gains over the next six months. Similarly, Qatar is seen as a market with particular potential, which despite losing 6.9 per cent on last month’s figure, still remains positive at 35 per cent.

All other GCC countries stayed out of negative territory, despite Kuwait, Oman and the UAE all dropping around 10 per cent on last month’s on balance figure as they slipped to 0 per cent, 16 per cent and 12 per cent respectively. Meanwhile, Bahrain gained 3.8 per cent, resulting in an on balance figure of 7 per cent for Jan. 2010.— business@khaleejtimes.com