Saudi Arabia Investor Confidence Index strong at 135.8 points; outperforms GCC Index despite 2.9% decline

The report draws together the submissions from international and regional institutional investors and starts to formulate the Shuaa GCC Investor Confidence Index. The Index has been designed to provide the global investment community with a benchmark of investor confidence for GCC countries and track changes in investor behaviour over time.

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

"The results of the July 2009 GCC Investor Sentiment Report conducted by Shuaa Capital, reveals that the Saudi Investor Confidence Index remains very strong at 135.8 points, outperforming the GCC Index. However, there has been a marked fall in confidence amongst international and regional investors towards the GCC, as seen by a 10.5 point drop in the GCC Index. Much of the decline in the GCC Index can be attributed to this month's significant fall in sentiment towards current economic conditions."

Schutzmann added, "Saudi Arabia enjoys the second highest level of investor confidence in the region. Even though the Kingdom saw a slight drop in its Confidence Index, along with Qatar, it is still seen as the top destination for investment."

Schutzmann went on to discuss the current condition and outlook for the GCC economies. He said, "It has proven to be a very challenging month for the GCC economies, with the balance of respondents figure for investors' perception of current economic conditions increasingly negative, slumping by over 30% this month to -15%. However, a decline in investor sentiment towards current market conditions has not been restricted to just the GCC this month, as the balance of respondents for Global Emerging Markets declined 14% to -5% whilst BRIC countries fell 9.1% to 13.3%."

Schutzmann stated, "The six month investor outlook for the GCC economy remains positive this month, with a balance of 53.3%, albeit lower than last month's 65.2%. Despite the 11.8% loss for the GCC, the six month economic outlook for the region compares favourably against both BRIC countries and Global Emerging Markets, which both recorded slightly higher figures of 56.7% and 55%."

Concluding Oliver Schutzmann said on the six month outlook for the Saudi stock market, "Investors have retained their positive six month outlook for regional stock markets, especially for the Saudi Arabian Tadawul which is expected to perform the best, with 56.7% expecting it to rise on balance."

The Shuaa GCC Investor Sentiment Report is a monthly survey which reports on the current and future expectations of the 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 current survey was conducted between 5 and 16 July 2009. Investors were asked questions about current and future economic conditions, stock markets, sectors and commodities.

The Shuaa GCC Investor Confidence Index and its sub-indices for all six GCC countries are derived from an equal weighting of responses to four questions of the GCC Investor Sentiment Survey: current view and six months outlook on economic conditions, current view and six month 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.