A study of over 650 companies across GCC conducted by Kuwait Financial Centre “Markaz” revealed that total earnings during 2013 amounted to USD 59.2 Bn and total earnings during 2H13 were USD 29.3Bn. 2H13 earnings were driven by strong performance from Financial Services, Real Estate, Construction, Telecommunications and Conglomerates.
Aggregate net profits from Financial Services in FY13 came in at USD 1.3Bn a growth of 54% over FY12. Real Estate sector’s earnings amounted to USD 3.7Bn growing at 47% for FY13. Construction related companies and conglomerates also had clocked an earnings growth of 16% and 12% respectively.
GCC region witnessed 10% overall positive growth in full year earnings during 2013 (FY13 vs FY12) lead by financial services and real estate sector. The financial services and real estate sector witnessed an overall earnings growth of 54% and 47% respectively owing to improving prospects in key markets such as UAE and Qatar. Some of the benefits of the real estate sector also spilled onto the construction related companies whose earnings grew at a rate of 16% over the full financial year of 2013.
GCC banks also displayed solid growth during 2013 and the overall earnings grew by 9% for the year 2013.
Bahrain and Kuwait topped the list of countries in terms of earnings growth at 24% each, supported by good performance in banking, financial service and real estate sectors. Kuwait’s performance can be attributed to its resurgence in its real estate whose earnings grew by 729%, albeit from a low base, during the year 2013. In contrast to UAE and Qatar, the resurgence in Kuwait real estate sector wasn’t reflected in its construction sector which ended the year with a full year negative earnings growth of 11%.
Oman’s corporates ended the year with overall positive earnings growth of 18%. Commodities and financial service were its top performing sectors.
UAE achieved an earnings growth of 15% (FY13 vs FY12) supported by good performance in its real estate and Conglomerates which grew at a rate of 72% and 70% respectively (FY13 vs FY12).
Saudi Arabia and Qatar managed to achieve single digit growth – 6% and 3% respectively.
Based on the current trend, we expect a strong earnings growth of 12% during the year 2014. We believe that local developments in the GCC region play a vital role in stock markets in the region. Improving economic prospects in the developed economy such as US and the Eurozone is expected to increase volume of exports across the region. Economic activities in anticipation of the Dubai Expo 2020 and Fifa World cup 2022 are expected to be positive for the real estate and construction related sectors.
Overall, we expect, Kuwait to grow by 12% in 2014 over 2013. Bahrain and Oman are expected to grow by 10% each during the same period. Saudi Arabia is expected to grow by 10% while Qatar and the U.A.E are expected to grow by 7% and 16% respectively.