Investors uncertain of outlook for Emirates

What's down DFM. Lingering concerns over Dubai debt affect confidence.

DUBAI // Local equity markets are off to a shaky start this year because of uncertainty about the UAE's economic outlook, which is being affected by Dubai's debt picture. The assessment is contained in the latest report on GCC investor sentiment prepared by the Dubai investment company Shuaa Capital, the largest investment bank in the UAE.

The regional investor confidence index, which gained ground in the second half of last year, declined 2.4 points to 114.5 last month from where it stood at the end of December. The regional index was pulled down by a confidence dip in the UAE, where the measure fell 12.8 points to 96.1 in December. "The UAE index has retreated, weighing down the GCC as a whole, as investors have become increasingly uncertain towards Dubai's current economic state," said Oliver Schutzmann, the chief communications officer at Shuaa and author of the report.

Mr Schutzmann said an overall bearish six-month outlook on regional markets was the main reason for the index's decline. "Leading the GCC decline were all three UAE markets - Abu Dhabi [Securities Exchange], Dubai Financial Market and NASDAQ Dubai. All saw confidence fall by over 25 per cent." All is not gloomy, however, as investors think there is potential for some regional markets to recover this year, and they are generally bullish on stock valuations beyond the near term.

Over 52 per cent of the balance of respondents surveyed said they thought the Saudi markets would stage a healthy recovery this year, while 37 per cent tipped Qatar would stage a rebound and 21 per cent expressed confidence that Abu Dhabi exchanges would be healthier. Shuaa uses the "balance of respondents" as a measure to gauge investor confidence. It is calculated as the difference between the percentage share of investors who are positive and those who are negative on market recovery.