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13 September 2016
Qatar's corporate full earnings are expected to be "flat" this year due to the "continued thrust" on infrastructure developments and "relatively better" credit growth expectations than its Gulf peers, Kuwait Financial Centre (Markaz) has said in a report.
In its recent report, Markaz said Qatar's corporate earnings fell by 11% in the first half of this year (H1, 2016). Qatar's net earnings growth was affected by the fall in real estate sector earnings which fell by close to 50%. The telecommunications and banking sectors witnessed an increase in earnings during H1, 2016 at 35% and 3%, respectively, Markaz said.
According to Markaz, persisting lower oil prices, liquidity squeeze and sedate global growth led to decline in GCC (Gulf Cooperation Council) corporate earnings in H1, compared with the corresponding period a year ago. In H1, corporate earnings in the GCC fell by 8% over the same period in 2015. With the exception of Oman, which registered a growth of 7%, all other countries recorded negative growth.
Total earnings in H1, 2016 came in at $32.8bn, partly supported by telecom and financial services sector, Markaz said.
Among the sectors, telecommunications and financial services posted positive earnings growth, as contribution from international markets and favourable exchange movements supported their bottom line. Earnings in the banking sector remained flat while earnings in commodities, real estate and construction related sectors contracted as the fall in oil prices is increasingly felt across non-oil sectors.
Blue chips fared relatively better, while earnings of mid-cap and small-cap companies took a beating in H1, 2016, falling by 38% year-on-year (y-o-y) and 22% respectively.
Earnings for large-cap stocks (market cap $3bn; 60 companies, 73% of all GCC market cap) declined by 5% in H1. For the full year of 2016, Markaz estimates earnings to fall by 4%. The region's heavyweight Saudi Arabia witnessed a decline of 7% in net earnings in H1, compared with the same period a year ago.
Earnings declined for all sectors except financial services.
The highest decline in earnings were witnessed in the real estate (-50%) and conglomerate (-36%) sectors. Markaz estimate full-year earnings to fall by 6% in 2016, due to further fall in earnings in the commodities, banking and construction-related sectors, as growth is expected to be affected by depressed oil prices.
Kuwait witnessed a decline of 6% in net earnings in H1, with commodities, real estate and financial services declining by 11%, 23% and 53% respectively. The banking and telecom sectors were the only exceptions in Kuwait as their earnings bucked the declining trend.
For full year 2016, Kuwaiti corporate earnings are expected to fall by 2%, due to moderate growth in banking and telecom sector, Markaz said.
Earnings for UAE companies witnessed a decrease of 8% in H1, 2016 (y-o-y) owing to low oil prices, sluggish economy and poor performance of real estate companies, Markaz said.
The real estate sector as a whole declined by 4% in H1 as real estate prices in the UAE were down owing to poor business sentiments and stagnant sales. Markaz expects UAE corporate earnings to fall by 3%, as subdued credit growth is expected to take a toll on banking sector earnings in H2, 2016 and on expectations of further earnings contraction in the real estate sector.
Qatar's corporate full earnings are expected to be "flat" this year due to the "continued thrust" on infrastructure developments and "relatively better" credit growth expectations than its Gulf peers, Kuwait Financial Centre (Markaz) has said in a report.
In its recent report, Markaz said Qatar's corporate earnings fell by 11% in the first half of this year (H1, 2016). Qatar's net earnings growth was affected by the fall in real estate sector earnings which fell by close to 50%. The telecommunications and banking sectors witnessed an increase in earnings during H1, 2016 at 35% and 3%, respectively, Markaz said.
According to Markaz, persisting lower oil prices, liquidity squeeze and sedate global growth led to decline in GCC (Gulf Cooperation Council) corporate earnings in H1, compared with the corresponding period a year ago. In H1, corporate earnings in the GCC fell by 8% over the same period in 2015. With the exception of Oman, which registered a growth of 7%, all other countries recorded negative growth.
Total earnings in H1, 2016 came in at $32.8bn, partly supported by telecom and financial services sector, Markaz said.
Among the sectors, telecommunications and financial services posted positive earnings growth, as contribution from international markets and favourable exchange movements supported their bottom line. Earnings in the banking sector remained flat while earnings in commodities, real estate and construction related sectors contracted as the fall in oil prices is increasingly felt across non-oil sectors.
Blue chips fared relatively better, while earnings of mid-cap and small-cap companies took a beating in H1, 2016, falling by 38% year-on-year (y-o-y) and 22% respectively.
Earnings for large-cap stocks (market cap $3bn; 60 companies, 73% of all GCC market cap) declined by 5% in H1. For the full year of 2016, Markaz estimates earnings to fall by 4%. The region's heavyweight Saudi Arabia witnessed a decline of 7% in net earnings in H1, compared with the same period a year ago.
Earnings declined for all sectors except financial services.
The highest decline in earnings were witnessed in the real estate (-50%) and conglomerate (-36%) sectors. Markaz estimate full-year earnings to fall by 6% in 2016, due to further fall in earnings in the commodities, banking and construction-related sectors, as growth is expected to be affected by depressed oil prices.
Kuwait witnessed a decline of 6% in net earnings in H1, with commodities, real estate and financial services declining by 11%, 23% and 53% respectively. The banking and telecom sectors were the only exceptions in Kuwait as their earnings bucked the declining trend.
For full year 2016, Kuwaiti corporate earnings are expected to fall by 2%, due to moderate growth in banking and telecom sector, Markaz said.
Earnings for UAE companies witnessed a decrease of 8% in H1, 2016 (y-o-y) owing to low oil prices, sluggish economy and poor performance of real estate companies, Markaz said.
The real estate sector as a whole declined by 4% in H1 as real estate prices in the UAE were down owing to poor business sentiments and stagnant sales. Markaz expects UAE corporate earnings to fall by 3%, as subdued credit growth is expected to take a toll on banking sector earnings in H2, 2016 and on expectations of further earnings contraction in the real estate sector.
© Gulf Times 2016
