Our objective for investing in the region, in 2018, is to position prominent themes, as well as deep
value stocks, which had the financial and operational agility throughout 2017 to whether macroeconomic
and geopolitical headwinds and offer strong earnings growth visibility. We are bullish on select
MENA companies regarding their earnings growth prospects, based on a combination of factors
including: extracting value from the domestic economy, accessing overseas markets,
optimising cost structures, product innovation and establishing stronger relations with clients.
Our event focuses on the wellness of MENA companies, post year one of fiscal consolidation.
In light of macro data stemming from select MENA economies, there are various signs signaling
that such economies have responded faster-than-anticipated to the implemented reforms.
During this year’s event, we position Saudi Arabia, Egypt and Kuwait, along with businesses exposed
to their economies, as focal points showing strong signs of speedy economic recovery.
Broad Corporate Access
Gouna, 14-16 May 2017
Mena Investor Conference
Cape Town, 11-12 Jan 2017
Egyptian Equities Conference
Cairo, 19-21 Jan 2016
New York, 27-28 Jan 2016
Egyptian Investor Conference
Cairo, 11-12 Jan 2015
London, 19-20 Jan 2015
New York, 22-23 Jan 2015
Egyptian Equities Conference
Saudi Arabia’s fiscal balances, up to 2Q17, continued to reflect a narrowing deficit due to continued
growth in oil revenues, alongside marginal decline in expenditure. However, this reflects the Saudi
government’s adamant approach to continue pressing strongly to transform the economy – even if it at
the expense of growth. This transformation has allowed businesses to become more agile and evolve out of
2017 with a state of financial well-being.
In 2018, we reckon Egypt will shift gears towards growth mode. 2017 was a transformational period
for the economy as the government leaped to rectify macro and fiscal imbalances. The economy yearns
to grow as the outlook trajectory for rates and inflation is skewed to the downside, allowing the
consumer, in 2018, a stronger purchasing sovereignty and the investor an affordable rate to invest.
With this in mind, we invite Egyptian listed corporates to reflect on their financial well-being, as
well as the way this would enable them to reap the benefits of a growth-inflected macro backdrop for 2018.
The story in Kuwait is not precisely of fiscal consolidation, but rather of the government finally
pulling the trigger on capital spending which has trickled down to a notable increase in corporate
borrowing. On this basis, the loan growth environment in Kuwait is recovering well, following a series of
one-offs in 2016. Projects like Al Zour Water Desalination, and Chervron bringing back oil investments to
Wafra, have stirred activity in the economy. The latest reclassification of Kuwait by FTSE to an EM status,
effective September 2018, is a result of the market addressing important clearing and settlement criteria
as of May 2017. Whether this upgrade will be carried out in tranches or conjointly will be determined in
March 2018. We take the opportunity to shed more light on key Kuwaiti market players, likely to see the
strongest passive inflows in 2018 on the back of the EM upgrade.
Qatar’s economy is slowly adjusting to GCC peer pressure. Cost overruns are accumulating as alternative trade
routes are sought and liquidity injections by QIA is continuously being made in the banking sector to stabilize the
economy. It will not be long in 2018 until this internal weakness spills over the external position which will likely
result with further downgrades to the sovereign. That said, the QIA is being proactive in terms of selling assets
abroad with a number already being reported and more in the pipeline. Amidst such pressures, there is also global
pressure in the natural gas market as Australia seeks to become Japan’s biggest client, stealing market share from Qatar.
Qatar will do whatever it takes to make global market share gains in natural gas and it has already started with QP
doubling capacities on-the-ground, to be able to maintain its global positioning.
The UAE economy is strong and diversified and the market is well supported by the diverse economy and valuations
remain attractive across banks, real estate, trade, food and logistics. It is a well-owned market, and new diversified
listings would add to its breadth. Banks should continue to see credit momentum pick up and the hospitality sector is
expected to continue performing well as the number of tourists grows. Moreover, the UAE’s target of becoming a global
trading hub is slowly, but surely materializing and this is the strongest long-term call we see paying off in the UAE.
Oman’s government has set appropriate fiscal targets for 2017 with the budget looking to reduce deifict to 12% of GDP
(from 24%). Growth is expected to remain at 3% in 2017, in line with 2016 with non-hydrocarbon growth to average at
c3.5%. Fuel price hikes have contributed significantly to narrowing the deficit and should the tax system see reform over
the medium term (corporate income tax, VAT introduction and excise duties) all will contribute to narrowing the deficit further.
The banking system is well capitalized and sector liquidity is normalizing as we start to see corporate loan growth picking up.
Morocco’s macroeconomic fundamentals remain sound. The balance of payments has been subject to some pressure,
but the risk of external instability is low. The current slowdown in import growth should help stabilise the
current account deficit, while pressures on forex reserves have abated since the authorities postponed the
exchange rate reform. Fiscal prospects are also looking much better after a poor performance in 2016, and the
economy is benefiting from better external conditions and the rebound in agricultural output. In the non-agricultural
sector, however, growth is still too sluggish. The Kingdom is capitalizing on its potential as a manufacturing hub,
the automotive industry is now the largest source of exports and several development projects are in the pipeline.