Arqaam Capital is delighted to invite you to its sixth Annual MENA Investor Conference where we will host senior management from listed companies across the MENA region. This should be an excellent opportunity for investors to meet with C-level management in both 1x1 and small group meeting settings.

This year will again deliver the usual mix of challenges and opportunities. However, GCC equity markets have gotten off to stronger start so far, supported chiefly by index inflows and the start of the 7 phase inclusion of KSA into FTSE and MSCI combined over this year and the next, potential for Kuwait’s upgrade to MSCI EM status to be announced this year, stabilizing oil prices amid a continued commitment to curbing supply and finally, continued progress on trade war talks.

The economic outlook for the GCC remains relatively insulated, with oil prices firm on supply control and with the oil market expected to tighten in Q219. Fiscal policy across the GCC is loosening, with fiscal accounts in either low single digits or in positive territory. Recent data is encouraging and is showing a pickup in growth across the region, highlighted mostly by more timely data out of Saudi showing a recovery in GDP growth as well as retail sales.

The past year has resulted in strong dislocation in the UAE, with some deep value stocks now available to investors. In addition, index country classification changes and rebalances are expected to continue to be a key theme going into the next 12 months. The Saudi MSCI and FTSE EM inclusion events are underway and are expected to bring in c.USD 60bn of combined active and passive money into the country; but the event remains underplayed for the moment. With the Kuwait FTSE EM inclusion now behind us, we are eagerly awaiting MSCI’s decision as to whether this market will be upgraded to Emerging Market status during the annual June country classification review announcement.

Although risks globally are tilted to the downside, we see strong thematic stories worth playing in the region. GCC banks are rationalizing costs through mergers as US rates have plateaued and the market remains fragmented. Saudi government reforms have continued and focus on increased privatization in the healthcare sector and improved enforcement of insurance policies, paving the way for some attractive investment opportunities in these sectors in the medium term, despite a continued expat exodus that weighed on the near term outlook. Discretionary consumer names benefit from real wage growth and social grants. In addition, we remain very bullish on Egypt as interest rate normalization is only just getting started, fiscal austerity has almost been completed and there is substantial room for private investments to pick up, while equities remain cheap.

Having said all that, we see vulnerabilities with twin deficits in Bahrain, Lebanon and Oman to a lesser extent, leaving very limited room for policy mistakes. Bahrain will need to begin implementing the reforms it promised as part of the financing package from the other GCC countries and reduce its fiscal break-even levels. The Lebanese government needs to start working on implementing the promised reforms during the CEDRE conference towards halving its fiscal deficit.

We hope that you will be able to join us and benefit from what is set to be a highly productive conference.

Tarek LotfyPresident GCC

Wafic NsouliHead Equities