DUBAI: Investor confidence in the Gulf Cooperation Council (GCC) economies took a “significant” drop in December following the Dubai World crisis, but improved post the Nakheel sukuk payment, Shuaa Capital said.
The monthly GCC Investor Confidence Index dropped 32.7 points to 98.1 points in the wake of Dubai World’s announcement on Nov. 25 to request a standstill on its $26 billion debt obligations while it restructured various parts of its businesses, including developer Nakheel, Shuaa said.
Dubai narrowly averted becoming the stage for the highest-profile sukuk bond collapse to date, with Abu Dhabi helping it with a $10-billion lifeline on Dec. 14, to head off a looming bond default by Nakheel and keep its parent afloat through to the end of April next year.
The index moved back and reached 116.9 points post the Nakheel sukuk payment, Shuaa said in its GCC investor sentiment report.
Shuaa also said the six-month investor outlook for the GCC economies took a slight hit in the first part of December, as all countries, apart from Qatar, lost ground on November’s figures. However, post the Nakheel sukuk payment, there was a distinct change in sentiment, with all economies, except Qatar, recording gains in their six-month investor outlook on economic conditions, Shuaa said.
The two investor surveys for December’s Shuaa Capital Investor Sentiment Report, carried out before and after the Nakheel sukuk payment, show on balance that investors expect a rise in the value of the euro, sterling and gold, Shuaa said.
Report participants expect all sectors, except real estate, construction & materials to either increase in profitability or remain relatively unchanged, Shuaa said.
