DOHA: Supported strongly by Qatar, the full-year earnings of GCC is estimated at 12 percent in 2014. The real estate sector, underpinned by banking and financial services, would be the driving factor of 2014 growth rate, Kuwait Financial Centre (Markaz) noted in its latest GCC Outlook.
The research noted that analyses the performance of GCC stock markets in 2013 and provides an outlook for 2014 based on earnings potential, market liquidity, valuation attraction and economic factors, expects full year earnings in 2013 to grow by 10 percent for GCC region.
“Going into 2014, we believe real estate sector would be the driving factor underpinned by banking and financial services. Petrochemicals sector is expected to remain muted in 2014. Corporate earnings which have been moderate for the past years in Saudi Arabia and Qatar could surprise on the positive side in 2014. We estimate full year earnings for GCC region in 2014 to be at 12 percent”, Markaz said.
“At the end of first half of 2013, we had neutral views on Saudi Arabia and Kuwait and positive views on UAE, Qatar, Oman and Bahrain. We were mostly right except for Saudi Arabia, which rallied higher as talks of regulatory reforms to open up the equity market for foreign investor’s direct participation boosted sentiments. UAE markets, Dubai and Abu Dhabi, though positive surpassed our expectations” states the report.
GCC markets had a phenomenal year with most markets registering double digit gains in 2013. Performance of GCC markets was on par with developed markets and better than emerging markets.
UAE markets hogged the limelight in part due to inclusion in ‘MSCI Emerging Index’, with Dubai index producing stellar returns of 107.7 percent and Abu Dhabi index registering strong gain of 63.1 percent in 2013. Strong expansion in P/E multiple amidst robust earnings growth on the back of healthy rebound in real estate markets and revival of business confidence sustained the rally.
Qatar stock index which was also included in the ‘MSCI Emerging Market’ index returned 24 percent in 2013. GCC heavyweight, Saudi Arabia ended the year with a 31 percent gain. Oman and Bahrain recorded healthy gains in the range of 17 percent to 18 percent in 2013. In Kuwait, while KSE price index delivered a gain of 27.2 percent Kuwait weighted index returned 8.4 percent.
The highlight of 2013 was the long expected MSCI upgrade of UAE and Qatar to Emerging Market status. The move is likely to take effect in Q2 of 2014, with UAE accounting for 0.4 percent of the index and Qatar accounting for 0.45 percent.
Economic growth in GCC is expected to sustain at 4 percent in 2014, driven largely by social spending, initiation of infrastructure projects and large-scale subsidies amidst unrest in neighbouring nations. Increasing oil production elsewhere and easing of sanctions in Iran is further expected to put downward pressures on global oil price.
The Peninsula
