Equities Expected To Have Highest Total Return in 2015 in Global and Local Markets, According to CFA Institute and CFA Society Kuwait Middle East Market Sentiment Survey

CFA Institute, the global association of investment professionals, and CFA Society Kuwait, the local society of CFA Institute, have launched the results of its fifth annual Middle East Market Sentiment Survey, which provides insights from CFA charterholders and CFA Institute members from across the Middle East region. 

Nearly half (47%) of investors expect equities in the global market to have the highest total return in 2015 (compared to other asset classes such as bonds, cash, commodities, precious metals and real estate). Nearly one-third (31%) of investors expect equities in local Middle East markets to have the highest total return this year while one-quarter (26%) of respondents expect real estate to have the highest total return.

The survey results were unveiled at a press conference today ahead of the CFA Institute Middle East Investment Conference (MEIC), which is being held for the first time in Kuwait on 10th February 2015 under the patronage of His Excellency Anas K. Al-Saleh, Minister of Finance, State of Kuwait. 

Nitin Mehta, CFA, Managing Director of CFA Institute in Europe, the Middle East, and Africa, stated: 

“For the fifth consecutive year, the Middle East Market Sentiment Survey provides useful insights into the expectations of some of the most senior finance and investment professionals working in the region. Interestingly, opinions related to public disclosures are a major theme in this year’s survey results. Given its importance in analysing listed companies, the majority of investment professionals (88%) in the region believe that both governments and corporations should increase efforts to create extensive systems for collecting data and disclosing information in order to help investors make informed investment decisions.”

Rafik Hafez, CFA, President of CFA Society Kuwait, commented: 

“We are delighted to be hosting the Middle East Investment Conference in Kuwait for the first time, and we look forward to welcoming His Excellency Anas Al-Saleh along with our prestigious speakers and extensive group of attendees. The results of the survey show that almost half of respondents (47%) think that greater economic diversification is critical to ensuring long-term sustainable growth in Kuwait. For Middle East investments, many respondents (39%) believe that infrastructure and government investment programmes are the most attractive attribute, while 28% of respondents attribute access to natural resources as the primary appeal.”

Five key findings from the survey include: 

1. Real estate, hospitality, and construction sectors will be the main drivers of foreign direct investment (FDI) over the next two years, according to nearly half (47%) of respondents. Following these sectors, 18% of respondents expect energy and only 9% expect transportation to be the main driver of FDI.
2. Fragmented views on the most insightful metric for tracking near-term economic corrections. One-third (34%) of respondents indicated that commodities pricing provides the most insight into potential near-term economic corrections while another one-third (33%) of respondents believe that equity markets provide the most insight. At the same time, another one-quarter (27%) use real estate as the best indicator of near-term economic corrections.
3. Political differences are a significant obstacle to one consolidated regional stock exchange. The vast majority of respondents (75%) cite political differences among countries as the most important hurdle for creating one stock exchange, which represents all GCC markets.
4. Increased corporate financial disclosures needed in Kuwait. In Kuwait, the Capital Market Authority has issued guidelines for proper disclosures by public companies. However, 88% of members surveyed still believe that companies need to disclose more information in order for investors to make informed decisions.
5. Financial educational opportunities in Kuwait are not sufficient. 61% of CFA Institute members based in Kuwait believe that educational opportunities for investment professionals in Kuwait are limited in quantity, while 30% believe these opportunities are adequate in quantity but not content.

An online survey was conducted from 13 January to 22 January 2015. 166 CFA Institute members and those with charters pending in eight countries across the Middle East participated in the survey, including: Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the United Arab Emirates.