Gulf capital markets still face tough conditions

Keith Mullin of Thomson Reuters, Ali A Al Gwaiz of Riyad Capital, Steve Perry of Standard Chartered Bank, Peter Fort of Morgan Stanley and Ziad Makhzoumi of Arabtec Holding. (SUPPLIED)

The Gulf capital markets will continue to witness tough conditions this year with drop expected in advisory fees, equity issues and new loans, top regional bankers said at a roundtable.

The study by Thomson Reuters showed that investment banking and adviser fees were down 46 per cent, mergers and acquisitions 40 per cent, equity issues 81 per cent, loans 81.5 per cent and debt issues were up 151 per cent.

"We still have a lot of uncertainty and I don't expect 2010 to be better than 2009 – but I hope I am wrong," said Ziad Makhzoumi, Chief Financial Officer of Arabtec Holding.

A "flight to quality" was predicted by Steve Perry, Managing Director and Head of Project Finance Syndications, Middle East and North Africa, for Standard Chartered Bank. He was generally optimistic about prospects for Abu Dhabi, Qatar and Saudi Arabia.

Ali A Al Gwaiz, Chief Executive Officer of Riyad Capital, was cautious about prospects for Saudi Arabia. "I think the Saudi Arabian economy has a better chance to do even better in 2010," he added.

For Peter Fort, Executive Director Mergers and Acquisitions, Middle East and North Africa for Morgan Stanley, the issues of transparency and government regulation was crucial for the region's future. "More transparency and regulation put in place will spur activity in the longer term," he added.

In the Thomson Reuters fourth quarter 2009 review of the Middle East investment banking industry, Standard Chartered topped the league in Middle East loan ranking with eight deals worth a total of $1.91 billion (Dh7bn). Riyad Bank led equity capital markets by volume and Morgan Stanley topped the ranking for mergers and acquisitions advising on Middle East deals worth $16.3bn.

"There is clearly appetite to do deals in the region but a lot of obstacles remain, including the return of underwriting to the loan market and more realistic valuations, both of which came up at the roundtable, Mullin said.

 

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