The HSBC survey recorded the biggest quarterly gain since the Gulf was hit by the global financial crisis last Autumn.
Business confidence on the rise
Business confidence among Gulf states rose in the second quarter of this year, with the strengthening price of oil and local market rallies helping to boost sentiment across the region, according to an HSBC survey. The survey recorded the biggest quarterly gain since the Gulf was hit by the global financial crisis last autumn, but one in three respondents expected the slowdown to continue for at least two years. Gulf economies have been boosted by the recovering price of crude, which topped US$147 a barrel last July before falling to as low as $30 by the end of last year. Oil has since recovered to trade at about $70 a barrel. Regional markets have also rallied in recent weeks, helped by the return of foreign capital to the region. International investors bought shares worth about Dh6.3 billion (US1.71bn) on the Dubai Financial Market (DFM) last month, up more than 20 per cent on April, helping the market advance earlier this month to its highest close since November. Net foreign investment in shares traded on the DFM last month more than doubled to Dh540.7 million as stocks gained 17 per cent. NASDAQ Dubai also saw trading volumes surge, rising 67 per cent to 331.3 million shares. The overall HSBC confidence index increased to 79.4 from 74.8 out of 100 points in the second quarter of this year. The quarterly HSBC Gulf Business Confidence Index, compiled by YouGov, surveyed 1832 business people from all six GCC countries in the second quarter. "The UAE showed one of the biggest bounces, owing to how sensitive and integrated it is with global economies compared with other GCC countries," said Tim Harrison, a spokesman for HSBC Bank Middle East. The UAE's confidence index rose to 65.9 points in the second quarter from 57.9 in the first quarter. Saudi Arabia rose to 86.8 from 82.5 in the same period. "Saudi Arabia is much less volatile and has moved on a more consistent line," Mr Harrison said. Business confidence in Kuwait, Oman and Qatar also recorded gains. Bahrain was the only GCC country with a dip in business confidence, to 78.2 from 80.7. The survey said 48 per cent of those questioned said they expected to see improved performance from their companies in the next quarter, compared with 42 per cent in the first quarter. Analysts said the results of the survey pointed to a "cautiously optimistic" economic outlook for the region this year. "Business has been through a tough nine months but some market participants are now seeing light at the end of the tunnel," said Tim Reid, the co-head of global banking for HSBC Middle East. "Things do not appear to be deteriorating; it's a far cry from the boom time of 2007 and early 2008 but most believe the worst is over." In Dubai, 36 per cent of respondents said they were optimistic about a growth in revenue in the next three months, compared with 33 per cent in Abu Dhabi. But the region's businesses remain cautious about the pace of recovery, with about one in five firms reporting they are pessimistic about their revenue streams, while about one in three predict the economic slowdown will continue for at least two years. More than half of business people surveyed confirmed that the Middle East was their principal trading region, but one in three predicted this market would slow this year. The survey was conducted through a questionnaire completed between May 27 and June 3. email@example.com