Shuaa UAE Investor Confidence Index jumps from 107.0 to 123.8 points in June

The report draws together the submissions from international and regional institutional investors and formulates the GCC Investor Confidence Index.

The Index is the only benchmark of investor confidence in the region and has been designed to track monthly changes in investor behaviour over time for all six GCC countries.

The GCC Investor Confidence Index saw a 14.1 point jump, rising from 119.4 points in May to 133.5 points in June. This is not the only positive result.

The highest investor confidence score in June was achieved by Qatar with 141.6 points which has taken the lead across all GCC markets, slightly ahead of Saudi Arabia which remained unchanged at 139.9 points. The UAE index witnessed the highest increase in investor confidence, rising by 16.8 points from 107.0 points to 123.8 points month on month.

Oman saw the Index rise by 13.1 points and now stands at 117.7 points. Both Bahrain (up from 96.8 in May to 109.8 points in June) and Kuwait (up from 87.3 points in May to 103.1 in June) are out of the doldrums and are beginning to see the return of investor confidence.

Commenting on the findings Oliver Schutzmann, Chief Communications Officer of Shuaa Capital and author of the Investor Sentiment Report said:

"The United Arab Emirates saw a massive improvement in investor confidence in June, with the Shuaa UAE Investor Confidence Index jumping 16.8 points, moving from 107 points in May to 123.8 points. The investor opinion on the UAE economy has improved considerably with only 12.4% of all investors holding a negative view on current economic conditions compared to 36.6% in May and 48.6% in April. The six month outlook also improved strongly with 51.7% of all investors expecting the economy to improve, up from 26.8% last month and 11.7% in April."

The GCC Investor Confidence Index followed closely behind, rising 14.1 points from 119.4 points in May to 133.5 in June. Views on the GCC's economies have seen a turnaround whereby 16.9% of all investors see current economic conditions as positive in June, compared to 9.9% of experts indicating negative economic conditions in May.

A significant number of investors believe that GCC markets will improve over the next six months with 70% of respondents having a positive outlook compared to 64.4% for BRIC countries and 61.1% for Global Emerging Markets. This is unsurprising given the fact that 40.4% of all respondents expect a further rise in oil prices over the next six months.

"Investors indicated that all GCC stock markets are undervalued, particularly the United Arab Emirates, while the Dow Jones Industrial Average, the Eurostoxx 50 and the FT-SE are all seen as overvalued by the majority of investors. Whereas 39.3% believe that the Abu Dhabi Stock Market remains an undervalued market, the majority of all respondents have suddenly become bullish on the Dubai Financial Market with 21.3% of the balance of survey participants seeing it as undervalued, compared to only 2.8% in May.

Nasdaq Dubai also recorded 19.1% of investors saying that its stocks are undervalued. Looking ahead six months, 49.4% of respondents see Saudi stocks rising, 44.9% expect the same for Abu Dhabi stocks, 46.1% for Doha stocks, 31.5% for Omani stocks and 25.8% expect stocks listed on the Dubai Financial Market to rise.

Of special interest this month was the question of whether investors were calling a bottom for the real estate sector. Investors believe that most GCC countries have not seen the floor yet with the exception of Saudi Arabia, where 37.1% of respondents have called the bottom, 28.1% are undecided and 19.1% are still negative on the real estate sector, adding up to a positive balance of 18% of all respondents.

Qatar is the only other market where real estate has almost seen the worst, with 27.0% of investors having called the bottom, while 30.3% are undecided and 28.1% have not called the bottom, leaving the balance of respondents slightly negative at 1.1%.

Concluding Oliver Schutzmann, said:

"Investors' appetite for the UAE and Qatar has increased notably with 37.1% having decided to invest in both markets within the next six months. Looking at the GCC as a whole, 52.8% plan to invest in the region and Saudi Arabia leads in terms of individual countries with 47.2% intending to invest there. This is in line with a bullish view on the oil price and investors calling the bottom on the Saudi Arabian real estate market."

The Shuaa GCC Investor Sentiment Report is a monthly survey which reports on the current and future expectations of the professional investment community towards the GCC region. Data from the report forms the Shuaa GCC Investor Confidence Index and sub-indices for all six GCC countries. The survey was conducted between 3 and 16 June 2009. 90 institutional investors responded to questions about current and future economic conditions, stock markets, sectors, currencies and commodities.

The Shuaa GCC Investor Confidence Index and the sub-indices for all six GCC countries are derived from an equal weighting of responses to four questions from the GCC Investor Sentiment Survey: current view and six months outlook on economic conditions, current view and six months outlook on equity market valuations. The Index and all sub-indices have a range between 0 and 200. A number greater than 100 represents positive sentiment while a number lower than 100 represents negative sentiment.