The Gulf Investment Fund (GIF) announced a quarterly update for the period ending 31 March 2023. NAV growth for the period was 4.4%, ahead of the benchmark index return of 2.3%. Positive performance came from Saudi Ground Services (up 43.3 per cent), Arabian Centres Limited (up 19.8 per cent) and Arab National Bank (up 15.4 per cent). Negative performance came from Commercial Bank of Qatar (down 22.2%), and Qatar National Bank (down 13.9 per cent).
Regarding the outlook, positive factors for the GCC remain the ongoing reforms, tourism growth and expansion of the non-oil economy. Shorter term, moderating inflation and central banks’ gradual easing of monetary policy will provide further support. Inflation in the GCC has largely normalised. The IMF expects GCC economies’ GDP to grow 3.7% in 2024 in real terms, with Saudi Arabia and Qatar to grow 4.0% and 2.2%, in real terms respectively.
The purchasing managers index (PMI) is still firmly positive across the Gulf, led by Saudi Arabia. All the underlying readings were strong, including output and new orders, which increased from an already high base.
New project awards in the GCC reached new levels in 2023, valued at over $200 bn in total, led by Saudi and UAE. Looking back, project awards previously peaked in 2014 when oil was trading close to $100 per barrel. Given the spending on KSA projects the manager expects contract awards to maintain an upward trend over the coming years.
Saudi Arabia welcomed 100 million tourists in 2023. It has now upped its 2030 tourism target to 150 million.
GCC countries are increasingly investing in clean energy to reduce reliance on fossil fuels and create opportunities for exporting renewable energy. Outside energy, sizeable investments are being made in transportation, social infrastructure, and digitalisation.
Despite the generally positive outlook, risks such as regional conflicts and pressure on Red Sea shipping traffic pose short term threats to the GCC’s economic stability.
GIF : Solid start to the year for Gulf Investment Fund