GCC investment execs say healthcare is top target in 2017

Survey says Gulf's healthcare industry is expected to receive the highest volume of investments this year

The Gulf's healthcare industry is expected to receive the highest volume of investments in 2017 among non-oil sectors as GCC countries seek to further diversify their economies, according to a new survey.

CFA Institute, the global association of investment professionals, said its annual Middle East Societies Market Sentiment survey also forecse an increase in hospitality and tourism investment.

It said in a statement that in Saudi Arabia, respondents indicated that capital markets opening up for foreign investments would be a key factor in easing regional liquidity shortfalls.

With rising concerns about the Trump administration’s protectionist policies and the potential risk this poses to trade agreements, the survey also showed it is the US energy agenda which will have the biggest impact on the GCC.

The survey added that if the dollar remains strong, the likeliest effect on investments would result from pressures on the currency peg - which would then negatively impact the real estate market.

Nearly 70 percent of the members surveyed agreed that oil prices are unlikely to reach higher than $60 per barrel while survey results also indicated that non-performing loans, rising Fed rates and tightening liquidity conditions will continue to pose significant challenges to banks in the region, with the cost of raising capital likely to increase.

Amer Abdul Aziz Khansaheb, president of CFA Society Emirates, said: “Investment professionals in the Middle East are conscious of developments in the US, as the new administration’s energy agenda will have global implications on oil prices and production.

"Since the GCC does not have its own independent monetary policy, rate hikes by the US Federal Reserve would pressurise the region’s pegged currency, given the current liquidity challenges and low economic growth rates. Higher risk premiums and an increase in the cost of capital would also be effects resulting from such US monetary developments.”

CFA society members also noted that creating incentives for foreign start-ups to set up in the GCC would be the most effective way to foster entrepreneurship and a start-up ecosystem in the region, given the growing need to diversify from an oil-driven economy.

Stocks were ranked as the highest performing asset class in the region during 2017, followed by commodities, private equity, bonds, real estate and lastly cash equivalents, according to the survey.

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