GCC corporate earnings seen growing 12% in 2014

New report by Kuwait Financial Centre says real estate sector will be driving force behind growth
GCC corporate earnings seen growing 12% in 2014
By Beatrice Thomas
Fri 24 Jan 2014 10:45 AM

Corporate earnings in the GCC are expected to grow by 12 percent in 2014, according to Kuwait Financial Centre entity Markaz, it was reported.

Markaz said an analysis of GCC stock markets found full year earnings in 2013 should grow by 10 percent for the region.

“Going into 2014, we believe [the] real estate sector would be the driving factor underpinned by banking and financial services,” Markaz said in a report carried by several local media.

“Petrochemicals sector is expected to remain muted in 2014. Corporate earnings which have been moderate for the past years in Saudi Arabia and Qatar could surprise on the positive side in 2014. We estimate full year earnings for GCC region in 2014 to be at 12 percent.”

It said at the first half of 2013, it had “neutral views on Saudi Arabia and Kuwait and positive views on UAE, Qatar, Oman and Bahrain”.

“We were mostly right except for Saudi Arabia, which rallied higher as talks of regulatory reforms to open up the equity market for foreign investor’s direct participation boosted sentiments,” it said.

“UAE markets, Dubai and Abu Dhabi, though positive surpassed our expectations.”

The report said the GCC markets had a phenomenal year with most markets registering double digit gains in 2013. The performance of GCC markets was on par with developed markets and better than emerging markets, it said.

The report said the UAE markets hogged the limelight in part due to their inclusion in the “MSCI Emerging Index”, with the Dubai index producing stellar returns of 107.7 percent and the Abu Dhabi index registering a strong gain of 63.1 percent in 2013.

The Qatar stock index, which was also included in the ‘MSCI Emerging Market’ index, returned 24 percent in 2013, while GCC heavyweight Saudi Arabia ended the year with a 31 percent gain, it said.

Oman and Bahrain recorded healthy gains of 17 percent to 18 percent in 2013 and Kuwait, while the KSE price index delivered a gain of 27.2 percent the Kuwait weighted index returned 8.4 percent.

The report said the highlight of 2013 was the long expected MSCI upgrade of UAE and Qatar to Emerging Market status. The move is likely to take effect in Q2 of 2014, with UAE accounting for 0.4 percent of the index and Qatar accounting for 0.45 percent.

Economic growth in GCC is expected to sustain at 4 percent in 2014, driven largely by social spending, initiation of infrastructure projects and large-scale subsidies amidst unrest in neighbouring nations.

It said increasing oil production elsewhere and easing of sanctions in Iran was further expected to put downward pressure on global oil price.

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