As we've all noticed, the biggest risk factors for GCC markets lay in the political issues escalating in the region as they are affecting market sentiment and reducing volumes, especially in UAE markets. On the other hand, the biggest challenges for the international markets are the trade war between the United States and China from one side, and rising interest rates from another. Both are putting a lot of pressure on global growth expectations.
2) To which markets do you expect to increase/decrease your equity allocation over the next three months?
I might increase allocation to the UAE markets, especially the banking sector. We believe that we are trading at the bottom and might witness a good comeback for the sector, as I mentioned, supported by the good results we are seeing.
3) If you were to pick one regional stock that you think will outperform over the next six months, which one would it be (and why)?
Picking one name would be challenging. I would rather stay on the safe side and choose a sector. That would be the banking sector, which has been doing pretty well and that is reflected in recent earnings announcements.
If we take, for instance, the disclosed results for FAB , ADCB and ADIB and the positive forecasts for the rest of the big banks, we see stability and growth in that sector and I believe this will be the best sector to hold over the short term.
4) How have Q3 earnings been so far across the region?
I think the results in the region are different and distinct across the sectors, where some are reporting good results, like the banking sector, while others are reporting modest results, such as the real estate sector.
5) What's your view on the real estate sector in the UAE?
We are still witnessing pressure on the real estate sector, which is resulting in a reduction in rents and prices in some areas. Hopefully, we will see a comeback in the sector, which is one of the important in the country, in the coming months.
6) How do you think the Saudi non-oil economy will perform for the remainder of this year and next? Is there much evidence of Vision 2030 policies filtering through in terms of economic growth yet?
Actually, I had a look at the privatization process that the kingdom aims to apply to meet Vision 2030, where it is looking to privatise a number of leading sectors.
I believe this will take the kingdom to another level, which will benefit whole components of the public and private sectors, and I believe the kingdom has the ability and the requirements to achieve these goals.
7) What are your views on the prospects for the Aramco IPO?
Based on the latest updates they have scheduled for 2020, I think the IPO will support the kingdom through the cash inflow that will result from the listing. If it happens as scheduled, it will be a very interesting IPO, so let us wait and see for more details to obtain a clearer view.
8) What's your view on oil prices?
Along with the tension in our region, oil dropped more than 8 percent in the month to date, but Saudi Arabia has given assurance that it will support the oil market with supply once sanctions are imposed on Iran, which will affect its productivity.
9) What is your view on the trade tensions between the U.S. and China? Do you expect an end to the trade war soon?
This has been affecting the markets big time and I doubt it will be resolved any time soon.
(Editing by Gerard Aoun and Michael Fahy)
Any opinions expressed here are the author’s own.
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