By Andy Sambidge
Deloitte study shows 47% of company financial chiefs are more optimistic compared to six months earlier
Optimism among financial chiefs at companies in the Middle East is at its highest for three years, according to the Q3 2014 edition of Deloitte's Global CFO Signals report.
The report found that despite ongoing turbulence in the Middle East, a net 47 percent of chief financial officers were more optimistic regarding the financial prospects of their companies compared with the preceding six months.
In the Middle East, 125 respondents representing both listed and non-listed companies, participated in the latest survey for Q3 2014.
"The disparate nature of the countries, their economies, and rates of growth across the region is reflected in the responses of CFOs at that time, with the strongest optimism coming from those in the Gulf countries where economic growth is the strongest," said James Babb, Deloitte Middle East CFO program leader.
"As of Q3, CFOs in the United Arab Emirates reported a net 62 percent increase in optimism, for example, whereas CFOs in Lebanon and Syria did not report any net increase in optimism."
With a continued focus on increasing cash flow and reducing costs, CFOs said they were also prioritising organic growth, the introduction of new products and services, and expansion into new markets.
The report said CFOs anticipated equity-driven growth for the Middle East, with a net 52 percent believing that major equity indices will continue to grow over the next year while a net 34 percent believed that equity issuance will continue to increase over the same period.
When it came to financing and leverage, bank borrowing and capital expenditure were identified as the key business metrics most likely to increase over the coming year by those polled.
One other notable rebound in CFO sentiments in the third quarter of 2014 was the appetite for risk, the Deloitte report said. When asked if it wasa good time to be taking greater risk onto the balance sheet, 45 percent of CFOs agreed, marking one of the highest levels since the first half of 2011.
"Low interest rates are among the driving factors causing this increase in risk appetite," said Babb. "This coupled with the perceived higher availability of credit seems to beencouraging CFOs to be less risk averse than in the past few years."