Sluggish recovery expected in regional market

The recovery of the region’s markets will be slower this year and in the year following, said EFG Hermes’ Director of MENA Strategy Simon Kitchen during EFG Hermes 12th One on One Conference on Monday.

Kitchen further projected that stock prices will stand at the same levels after the collapse of Lehman Brothers and the global financial crisis.

Kitchen noted that there is a liquidity death in the region’s markets, leading to fluctuations in the stock markets. He added that companies with strong management, healthy financial listings, and efficient access to capital are best-positioned to profit from the current fluctuations.

Companies that are largely exposed to oil prices, government spending, and sizeable loans will be majorly affected by these fluctuations, added Kitchen. A strategist at EFG Hermes emphasised the importance of searching for alternative sources of energy and reducing support on the region’s oil reserves.

He said stock markets in the Gulf region have been adversely affected by the decline in oil prices, adding that Saudi Arabia and the UAE are currently in the process of selling some of their foreign financial assets to finance the budget deficit, and to maintain government spending in light of the decline in oil prices.