The performance of GCC markets was mixed in 2014, with the first nine months characterized by a steady uptrend, and the last three months witnessing extreme volatility, according to an expert.
“A strong downward bias in the first two weeks of December, driven by an aggressive correction in global oil prices, erased the year’s gains before a sharp rebound brought some relief to investors,” Sachin Mohindra is the portfolio manager for Invest AD’s SICAV GCC Focus Fund, said.
GCC markets have been dominated in recent weeks by movements in oil prices and other international developments, a trend that is set to persist in the short term. Statements from OPEC and other oil producing nations indicate they are focused on preserving market share and not yet willing to cut production, indicating further volatility ahead.
Sentiment will also be influenced by the strength of the US dollar relative to emerging market currencies, growth indicators in Europe and Japan, and statements from the US Federal Reserve. Regional markets experienced a sharp correction in early December on the back of sliding oil prices that was exacerbated by leverage-driven margin calls.
In the weeks ahead any announcements relating to GCC government budgets for 2015 will be watched closely by investors. The absolute levels and composition of capital spending in the New Year, as well growth targets, will provide some visibility on the prospects of a number of listed GCC firms. The annual results of listed companies and any statements on their earnings guidance for 2015 will also be key determinants of medium-term market direction.