UAE. SHUAA Capital, the region’s leading financial services institution, today issued its December Special Edition GCC Investor Sentiment Report, the only report of its kind for the Gulf markets.
December has been an incredible month for the global financial community, given the events surrounding Dubai World and its announcement on 25 November 2009 to request a standstill on its debt obligations while it restructures various parts of its business, including the master developer, Nakheel.
The subsequent repayment of the Nakheel ’09 Islamic bond, or sukuk, via a loan from Abu Dhabi, was equally unexpected and highlighted the issue of uncertainty in regional markets.
Owing to this, two investor surveys for December’s SHUAA Capital Investor Sentiment Report were conducted - one before the Nakheel sukuk repayment and one after. By doing this, SHUAA Capital is aiming to fairly reflect investor confidence in the region, drawing together the viewpoints from the regional and international professional investment community.
Commenting on the Index findings Oliver Schutzmann, Chief Communications Officer of SHUAA Capital and Author of the Investor Sentiment Report, said:
“The UAE index slipped the most out of all GCC countries in part one of the survey, moving to a record low of 82.5 points, although part two saw the UAE make up much of this loss, with investor confidence rising to 108.9 points. 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 United Arab Emirates and the prospects of its stock markets.”
“Part one of the December 2009 SHUAA Capital GCC Investor Sentiment Report, which was conducted before the repayment of the Nakheel sukuk was announced, revealed a significant drop of 32.7 points in the GCC Investor Confidence Index, slipping below the 100 point mark, the threshold indicating negative investor confidence, and hitting 98.1 points. However, post the Nakheel sukuk payment the index moved back into positive territory, reaching 116.9 points.
Regarding investor sentiment towards the current state of GCC economies, Oliver Schutzmann commented:
“Not surprisingly, following the Dubai World news there was a massive shock which changed the view on current economic conditions.
There was a significant negative shift in investors’ perception of current economic conditions with investor confidence towards the GCC falling from 34.5% on balance in November to -50%.
Notably, after the Nakheel sukuk payment, this figure rose to a relatively neutral 3.2%. Unsurprisingly, the UAE saw the biggest loss in investor confidence towards current economic conditions with a sharp decline from 20.7% in November to -63.3% in part one of December, making some of this up in part two by regaining some territory as it moved to -19.4%.”
Finally, Oliver Schutzmann discussed the impact of the Dubai government’s repayment of the Nakheel sukuk:
“Following the Dubai Government’s decision to help Dubai World fully repay its Nakheel 2009 debt obligations, we asked investors if this move impacted their investment decision in various regional and emerging market countries.
There was not one negative on balance figure for any of the countries or regions, with the GCC (25.8%) outperforming BRIC Countries and Global Emerging Markets, which both had on balance figures of 0%.
The Dubai Government’s move resulted in Abu Dhabi and Dubai both leading the way for the GCC on this question, with 32.3% and 25.8% of respondents saying that it would have a positive impact on their investment decision.”