CFA Institute Reveals Results of its Annual Middle East Societies Market
Sentiment Survey 2017
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Bond yields in the region likely to increase.
Regional stocks expected to be the highest performing asset class in 2017.
Healthcare to receive highest volume of investments amongst non-oil sectors.
NPLs, rising Fed rates, tightening liquidity and credit risk identified as biggest
concerns for banks.
Amongst US Developments, the Trump administration’s energy agenda will have
biggest impact on the region.
Dubai, 21 February 2017 – CFA Institute, the global association of investment professionals,
revealed the results of its annual Middle East Societies Market Sentiment Survey at a press
conference ahead of its Middle East Investment Conference (MEIC), to be held in Abu Dhabi on 23
February 2017. The survey presented responses from CFA charterholders and members from across
the Middle East.
According to the survey, the healthcare industry is expected to receive the highest volume of
investments in 2017 amongst non-oil sectors, followed by hospitality and tourism; as GCC countries
seek to increase the economic contribution of such segments. In Saudi Arabia, respondents indicated
that capital markets opening up for foreign investments is a highly important factor in easing
regional liquidity shortfalls. With rising concerns about the Trump administration’s protectionist
policies and the potential risk this poses to trade agreements, the survey showed it is the US energy
agenda which will have the biggest impact on the GCC. If the dollar remains strong, the likeliest
effect on investments would result from pressures on the currency peg; which would then negatively
impact the real estate market.
The GCC has seen a record volume of bond issuances over the past year, with this trend expected to
continue, almost two-thirds of respondents believed that bond yields in the region will increase.
Nearly 70 percent of the members surveyed agreed that oil prices are unlikely to reach higher than
$60 per barrel. NPLs, rising Fed rates and tightening liquidity conditions will continue to pose
significant challenges to banks in the region, with the cost of raising capital likely to increase.
Amer Abdul Aziz Khansaheb, CFA, President of CFA Society Emirates, commented on the findings,
saying: “Investment professionals in the Middle East are conscious of developments in the US, as the
new administration’s energy agenda will have global implications on oil prices and production. Since
the GCC does not have its own independent monetary policy, rate hikes by the US Federal Reserve
would pressurise the region’s pegged currency, given the current liquidity challenges and low
economic growth rates. Higher risk premiums and an increase in the cost of capital would also be
effects resulting from such US monetary developments.”
CFA society members noted that creating incentives for foreign start-ups to set up in the GCC would
be the most effective way to foster entrepreneurship and a start-up ecosystem in the region, given
the growing need to diversify from an oil-driven economy. The private sector will have to play a
larger role in diversification efforts as governments look to realign spending.
Mr. Khansaheb added: “We are delighted to be hosting the Middle East Investment Conference in
Abu Dhabi for the second time. The findings from our survey suggest that the majority of
respondents believe improving market transparency and accountability is key to improving trust in
the UAE’s investment industry and ensuring long term sustainable economic growth. The survey
results reflect the discussions and debates we hope to encourage at the conference, where
practitioners, leading thinkers in finance and investment, and eminent speakers will reveal insights
about the future of the Middle East’s financial landscape and where the opportunities lie for
investors.”
Top ten key findings:
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46% of respondents answered Very Important and 31% answered Extremely Important when
asked how important will the opening up of Saudi Arabia’s capital markets be for foreign
capital inflow into the region and liquidity easing.
42% felt that a stronger dollar is likely to pressurise the currency peg, which will then
negatively impact the real estate market.
61% of the members surveyed believed that bond yields in the region will increase, 16% said
that they would stay the same and only 11% thought that yields would decrease.
When asked what the expected return from a multi-asset class portfolio (equity, bonds,
cash, real estate, commodities, private equity etc.) is likely to be over the course of the year,
48% said in the region of 0% to less than 5% and 37% of respondents indicated that returns
would be between 5% and 10%.
Stocks was ranked as the highest performing asset class in the region during 2017, followed
by commodities, private equity, bonds, real estate and lastly cash equivalents.
The healthcare industry is expected to receive the highest volume of investments in 2017
amongst non-oil sectors.
47% believe that lower market growth rates and the increased cost of raising capital
shouldn’t necessarily impact corporate profitability in the region.
More than trade agreements and fed policies, the Trump administration’s energy agenda
will have the biggest impact on the GCC.
NPLs, rising Fed rates, tightening liquidity and credit risk will continue to be the biggest
concern for banks in the region.
Brent crude oil prices are expected to remain in the $50-$60 region during the year.
Methodology
An online survey was conducted from 22nd January to 13th February 2017. Participants included 100 CFA society
members across its societies in Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates.
Ends
Media contacts
For and on behalf of CFA Institute in the GCC and Middle East
Vadia Rai/Neel Bose @ FTI Consulting
T: +971 (0)4 4372110
[email protected]
About CFA Society Emirates
The CFA Society Emirates Society is an association of local investment professionals consisting of
portfolio managers, investment advisors, educators and other financial professionals. With 600
members, CFA Society Emirates is the largest member society in the GCC region comprising over half
of the total number of CFA charterholders in the Gulf. The society also represents a majority of the
4,773 candidates from the region who took the CFA exams in 2009. With CFA membership in the
GCC anticipated to double over the next decade, a significant share of this growth is expected to be
in the UAE.
About CFA Institute
CFA Institute is the global association of investment professionals that sets the standard for
professional excellence and credentials. The organization is a champion for ethical behaviour in
investment markets and a respected source of knowledge in the global financial community. The end
goal: to create an environment where investors’ interests come first, markets function at their best,
and economies grow. CFA Institute has over 140,000 members in 157 countries and territories,
including 134,000 CFA charterholders, and 147 member societies.