Uncertainty takes its toll - SHUAA GCC Investor Confidence Index slips 7.8% to 105.6 in February

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Dubai, 03 March 2010: SHUAA Capital today issued its GCC Investor Sentiment Report, the only report of its kind for the Gulf markets. The SHUAA GCC Investor Confidence Index and its country sub-indices have a range between 0 and 200. A number greater than 100 represents positive sentiment while a number lower than 100 represents negative sentiment.

The GCC Investor Confidence Index fell 8.9 points in February as uncertainty around the Dubai WorldDubai World debt restructuring plans weighs on investor sentiment. After December's significant second half gains which followed the announcement to repay the NakheelNakheel '09 Sukuk in full, the GCC Index has now recorded two months of consecutive declines, with the Index reading 105.6 points. The UAE (-11.7 points), Saudi (-8.7 points) and Qatar (-5.8 points) Indices lead the decline. The UAE Index now stands at 84.4 points, just 1.9 points off of its all time low following the Dubai WorldDubai World "standstill' announcement in late November last year.

Specifically, this month's sentiment survey asked members of the professional investment community if they require more transparency and disclosure on the Dubai WorldDubai World debt situation before they could make investment decisions in regional stock markets. Unsurprisingly, there was a resounding "yes" for all UAE stock markets. The balance of respondents - the difference between the percentage share of survey respondents saying "yes" or "no" - was 70% for Dubai Financial MarketDubai Financial Market, 62.5% for Abu Dhabi Stock Exchange and NASDAQ Dubai. Interestingly, there was also a "yes" response for all other regional markets, indicating an inextricable link between GCC markets. The balance of "yes" responses was 12.5% for the Saudi, Qatar and Bahrain stock exchanges, 15% for Oman and 27.5% for Kuwait.



Oliver Schutzmann, Chief Communications Officer of SHUAA Capital and Author of the Investor Sentiment Report, commented on the results: "The GCC is operating under a cloud of uncertainty as the professional investment community awaits the next move regarding the Dubai WorldDubai World restructuring efforts. Trading volumes are low, five year credit default swaps for Dubai - the cost of insuring debt against default - rose as high as 651 basis points in February¹, and both local and international investors remain on the sidelines.

"As such, it comes as no surprise that investors are erring on the side of caution and are not over confident towards the UAE and wider GCC," added Oliver Schutzmann. "However, it is important to note that the six month investor outlook for the GCC's economic performance as a whole remains in positive territory, with 30% of investors expecting improving economic conditions, 47.5% seeing no change and 10% anticipating a decline. This indicates that despite short term uncertainty, investors expect economic conditions in the GCC to improve within the next six months."

This view is also reflected in the six months GCC sector profitability outlook. Apart from Real Estate, Construction & Materials as well as Banks & other Financial Institutions, all sectors are expected to record strong profitability growth over the next six months. Telecoms, Media & Technology are, once again, expected to be the most profitable, with 35.0% on balance. Pharmaceuticals & Transportation & Logistics both have on balance figures of 30.0% after slight gains, while the Utilities sector is not far behind at 25%. Meanwhile, a strong gain of 15.5% in the Heavy Industries sector took it to 22.5% on balance; this is on par with the Consumer & Retail industry.

Investors' six month outlook for regional stocks is positive this month for all regional markets except the Dubai Financial MarketDubai Financial Market and NASDAQ Dubai. The view towards the Saudi Stock Exchange is relatively unchanged and still expected to set the standard for the region with 45% of the balance of investors anticipating stock prices to rise. Also in healthy positive territory is the Qatar Stock Exchange, which had an on balance figure of 30% for February. The Oman Stock Exchange and Abu Dhabi Stock Exchange are also expected to see some gains over the next six months, with on balance figures of 12.5% and 10% respectively.

¹Source: Bloomberg

Click here for a copy of this month's SHUAA GCC Investor Sentiment Report.

The SHUAA GCC Investor Sentiment Report is a monthly survey which reports on the current and future expectations of the investment community towards the GCC region. Data from the report forms the SHUAA GCC Investor Confidence Index and sub-indices for all six GCC countries. The current survey was conducted throughout February 2010. Investors were asked questions about current and future economic conditions, stock markets, sectors and commodities.

The SHUAA GCC Investor Confidence Index and its sub-indices for all six GCC countries are derived from an equal weighting of responses to four questions of the GCC Investor Sentiment Survey: current view and six months outlook on economic conditions, current view and six month outlook on equity market valuations. The Index and all sub-indices have a range between 0 and 200. A number greater than 100 represents positive sentiment while a number lower than 100 represents negative sentiment.

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About SHUAA Capital psc:
SHUAA Capital psc maintains a leadership position in Investment Banking, Asset Management, Brokerage, Private Equity, Finance, and Research. Headquartered in Dubai, in the United Arab Emirates, SHUAA Capital has a regional presence with offices in Abu Dhabi, Riyadh, Doha, Cairo and Beirut. Embedded in the dynamic economic environment of the Gulf Cooperation Council (GCC), SHUAA Capital provides a broad range of financial services to corporations, governments, institutional clients, and high net worth individuals. Since 1979, SHUAA Capital has played a prominent role in shaping the financial services landscape of the GCC and will continue to be at the vanguard of regional integration into global financial markets. www.shuaacapital.com

For further information contact:
Oliver C. Schutzmann
Chief Communications Officer
SHUAA CAPITAL psc
Level 2, West Wing, The Gate Building
Dubai International Financial Center
P.O. Box 31045, Dubai - UAE
Tel: +971 4 3651 872
Fax: +971 4 3303 550
Mob: +971 506405722
oschutzmann@shuaacapital.com

© Press Release 2010