The GCC markets have quieted down a little after the earnings season.
The most important sectors (the most heavily weighted ones in the indices) have reported sub-par earnings for 2009, with negative surprises occurring in the fourth quarter. It seems the economy slowed down significantly in the latter part of the year, and there are a few reasons which it can be attributed to (e.g. Dubai).
Market volumes have lessened quite significantly in the latter half of February showing a cautiousness that is usually related to an environment that is not so transparent. Investors in the GCC are looking to dividend anouncements, restructuring plans (e.g. GFH in Bahrain) especially in banks, and Dubai.
All is not put on pause though, for it is important to try to anticipate where the economy is at the moment when you are not sure what the market is up to. Luckily, I have access to, as well as the general public, to bayt.com's monthly surveys on key economic thermometers such as jobs and confidence levels.
The job market has been quite squeezed in the last quarter of 2009, extending its hibernation into the beginning of 2010. At the moment it seems there is a slow but gradual thawing of this frozen market.
Caution has been the main attribute employers have adopted in the past 6-8 months, but let us look to what bayt.com's survey on jobs has to say (or more prudently, what employers in the region have to say).
"69% of the respondents claimed they will hire in a year’s time. 32% said they would definitely hire in the next 12 months. Some probability of hiring was mentioned by another 37%. Hiring expectations of large scale local organizations for the next one year were relatively higher than other sectors."
So according to this we can maybe expect a pick up in the job market somewhere towards the end of the 2nd quarter. I think by that time also, we will have a better indication of where global economies are placed. This is important for the GCC because oil prices are buoyed when the global economy is strong.
The report by bayt.com shows that the immediate future (3-4 months) looks bleak, but that things might pick up in the 2nd half of the year.
Click to enlarge
The confidence indices shown above are:
CEI: Consumer Expectation Index
PCI: Propensity to consume/spend Index
CCI: Consumer Confidence Index
ECI: Employee Confidence Index
Pay attention to the trend that it has taken, and not necessarily the values assigned to each line or point. It is important to take into consideration the pick up that took place in the summer of last year, starting from spring. This was short lived as confidence levels came down again the last quarter of the year.
Please refer to the report for further information on these levels, how they are calculated and what they mean (if it is not already obvious to you).
Disclosure: Long certain equities in the GCC