While the announcement by the Dubai government to restructure Dubai World had a negative impact on investor’s decision in the GCC, confidence is beginning to recover, according to research by a Dubai-based investment bank.
SHUAA Capital’s latest ‘GCC Investor Sentiment Report’ found that investor confidence dropped 46.8 points to 82.5 points following the announcement by Dubai World that it would be delaying its debt repayments.
The subsequent repayment of the Nakheel sukuk led to a resurgence in investor sentiment, rising back above the crucial 100 point mark to 116.9 points, the report found.
“Given that the UAE was at the epicentre of the Dubai World saga, the quick recovery made by the UAE Index clearly indicates the resilience of the market. It is also evident from this month’s special report that investor confidence is much more robust than many media reports suggest, the professional investment community has a differentiated view on what has happened and that the investment community continues to have a positive outlook on the economy of UAE and the prospects of its stock markets,” said Oliver Schutzmann, chief communications officer of SHUAA Capital and author of the report.
Shuaa Capital’s October GCC Investor Sentiment Report rose by 3.2 percent to 132.2 points, the third monthly rise in a row.
The December report found that confidence across the GCC region was at 116.9 points, showing that while confidence is beginning to recover it still has some way to go to get back to levels prior to the Dubai World announcement on November 25.
The latest report also found that investors still have a negative outlook of the UAE economy but the majority are optimistic that conditions will improve over the next six months.
In terms of sectors, the report found that investors believe that utilities, transportation and logistics, telecoms and pharmaceuticals will show a rise in profitability over the next six months, while real estate, heavy industries and bank and other financial institutions will decline.
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