58 / ENTREPRENEUR.COM / August 2019THE NEW
NORMAL
MONEY ECON
WHY 2019 AND 2020 WILL BE GREAT VINTAGE YEARS FOR
INVESTING IN THE UAE AND KSA
58 / ENTREPRENEUR.COM / July 2019F
our years ago, I wrote an article calling the peak in the
investment cycle in the consumer sector. Today, I am
calling the end of the prolonged downturn we have
been in since oil prices peaked in 2014.
The broader economic indicators are already signaling
a rebound. This can be seen in the purchasing managers
indices, as well as in the foreign direct investment (FDI), which
was up by 126% in the Kingdom of Saudi Arabia (KSA) in 2018.
In the capital markets, the massive oversubscription of the
international bond issues of the KSA government and of Saudi
Aramco is also a sign of investors’ confidence in the region
increasing.
In terms of our own data at Awad Capital, our clients are
reporting “marginal improvements” in demand for their
products and services in 2019 so far, on a like-for-like basis
relative to last year. These are clients in the food and beveragesectors, diversified retail, and the broader consumer sector.
The acid test will once again be the summer, and the religious
holidays in terms of their impact on consumption.
This year will be the first one in a while where Eid Al Fitr
finished during the school year, with consumers in the UAE
going back to the country for a few weeks before the summer
holidays officially kicked off. On the other side of the summer,
Eid El Adha will fall in August instead of September, hence
juxtaposing summer holidays and Eid holidays, and bringing
the consumers back home a few days or even weeks earlier.
The cumulative effect of these two seasonal factors will
be, in my view, supportive of local demand, and dampen the
negative effect of the holidays on business activity.
Our forecast is that the real turnaround will start to be seen
in the numbers in Q4 2019- read on for more on why we
expect this to happen.by ZIAD AWAD