By Sarah Townsend
Low oil price leads to Gulf-wide credit squeeze, says consultancy Markaz
UAE listed companies’ earnings dropped by 8 percent year-on-year in the first half of 2016 as low oil prices and weak economic growth impact performance.
Research by Kuwait Stock Exchange-listed Kuwait Financial Centre (Markaz) found the decline was led in particular by real estate companies, whose earnings dropped by 4 percent compared to the same period last year “owing to poor business sentiments and stagnant sales”, it said.
UAE corporate earnings are expected to fall by 3 percent in the second half of the year as a Gulf-wide credit squeeze takes its toll on the banking sector, the research added.
Across the GCC, corporate earnings fell by 8 percent year-on-year in the first half of 2016 with the exception of Oman, which registered 7 percent growth.
Total earnings stood at $32.8 billion, driven mainly by the telecoms and financial services sectors.
However, banking sector earnings remained flat and commodities, real estate and construction-related sectors all contracted largely due to the impact of low oil prices.
In Qatar, earnings fell by 11 percent, affected by a substantial, 50 percent fall in real estate sector earnings, while telecoms and banking held up with earnings increases of 35 percent and 3 percent respectively. Full-year earnings are expected to be flat.
Saudi Arabia recorded a 7 percent decline in net earnings during the period, Markaz found, with earnings declining for all sectors except financial services with the most dramatic fall in the real estate sector (-50 percent). Full-year earnings are expected to fall by 6 percent.
Meanwhile, in Kuwait, corporate earnings declined by 6 percent with commodities, real estate and financial services declining by 11 percent, 23 percent and 53 percent respectively. Full-year earnings are expected to fall by 2 percent.
Total full-year earnings across the GCC are expected to fall by 4 percent, according to the research.For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.