GCC Investor Confidence Index fell 2.4 points in January, Shuaa Capital's Investor Sentiment Report for January 2010 revealed. However, Saudi Arabia was the only country last month to see its index gain ground, as it rose 6.6 points to 142.4. Shuaa Capital, the region's leading financial services institution, said the GCC Investor Confidence Index has been designed to provide the investment community with a benchmark of investor confidence for GCC countries and tracks changes in investor behavior over time. Commenting on the Index findings, Oliver Schutzmann, chief communications officer of Shuaa and author of the report, said: “Following an improvement of the GCC Investor Confidence Index at the end of 2009, it decreased slightly by 2.4 points to 114.5 in January 2010. December's special investor sentiment report reflected the impact of the decision to repay the Nakheel Sukuk on time, resulting in a jump in the Index. The UAE Index has subsequently lost 12.8 points to 96.1 as investors have become increasingly uncertain towards the economic outlook on the UAE economy. Elsewhere, despite making a 5.9 point loss on December, Qatar's index remained in a strong position at 130.8 points.” Regarding investor sentiment toward the GCC markets, Schutzmann said: “Driving much of this month's GCC Index decline was primarily the bearish six month stock price outlook of participants for all GCC countries. The balance of respondents figures for stock price outlook fell by 14.8 percent for GCC stock markets. Leading the GCC decline were all three UAE markets - Abu Dhabi Stock Market, Dubai Financial Market and Nasdaq Dubai - all saw confidence fall by over 25 percent. “Furthermore, this month we asked investors which stock markets they expected to recover in 2010, they responded positively towards the Abu Dhabi (21 percent), Saudi Arabian (51 percent) and Qatari (37 percent) stock indices while uncertainty for other markets outweighed positive sentiment. Commenting on the performance of regional stock markets, Schutzmann said “investors are increasingly bearish on Western markets this month and GCC markets are seen to be much more attractive over the next six months. The FTSE, Eurostoxx 50 and Dow Jones 30 all saw their on balance figures drop by over 30 percent this month to -30 percent, -40 percent and -30 percent respectively, indicating that they are seen as significantly overvalued. Comparatively, the Saudi Stock Exchange gained 3.4 percent on last month, rising to 26 percent on balance, while all other markets in the GCC, except the Kuwait and the Dubai Financial Market, at -12 percent and -2 percent respectively, remained in positive territory.” He highlighted the six-month outlook on the profitability of GCC industry sectors. He said all sectors, apart from real estate, are expected to record increases in their profitability over the next six months according to survey participants. Telecoms, media & technology (TMT) are still expected to be the most profitable, with 35 percent on balance. Pharmaceuticals saw a strong gain of 11.9 percent on last month as they moved to 28 percent on balance. Making significant progress in January were banks and other financial institutions 17.2 percent, recording 14 percent for January 2010. Heavy industries moved into positive territory this month at 7 percent, while the real estate, construction and materials industry made up a very encouraging 20 percent on last month, although still remaining in negative territory. Shua'a Capital expects the UAE markets to post gains of around 20 percent to 25 percent in 2010. “The favorable valuation parameters of the market at current levels compared to the market's own history, as well as to regional and global peers, will prove to be core catalysts for the market in 2010. We also believe that our forecast will be supported bycorporate earnings growth (expected to record a growth around 17 per cent coming from a low base in 2009), some other positive corporate news flows, and improved investor” sentiment post-Dubai World's debt restructuring.”
