Key facts
- Companies in the Gulf will report second-quarter earnings, providing insight into the financial impact of the Iran conflict.
- Banks and real estate sectors are considered most exposed to the conflict's effects on inflation and interest rates.
- Energy companies may benefit from price volatility despite supply disruptions.
- Economies reliant on the Strait of Hormuz, such as the UAE, Qatar, and Kuwait, are projected to contract.
- Saudi Arabia and Oman, with alternative trade routes, are expected to see economic growth.
- Regional telecom operators have demonstrated resilience.
- Gulf banks are anticipated to report a decline in profits due to reduced trade finance and credit card spending.
Gulf companies are set to reveal the financial impact of the ongoing conflict with Iran as they report their second-quarter earnings this week. Analysts anticipate mixed results across sectors, with banks and real estate facing challenges due to inflation and interest rate impacts, while energy and telecommunications companies are expected to show more resilience.
The economic fortunes of regional economies are largely dependent on their reliance on the Strait of Hormuz, a critical shipping channel. Saudi Arabia and Oman, which have access to terminals outside the strait, are forecast to experience economic growth. In contrast, the United Arab Emirates, Qatar, and Kuwait, which depend on the strait, are projected to contract.
Energy companies are expected to maintain strong earnings due to elevated prices, although some, like UAE's ADNOC Gas, have reported declines in domestic sales following an incident at a plant. Telecom operators, including Saudi Arabia's STC and Mobily, and the UAE's e&, have proven resilient due to long-term contracts. The consumer sector, encompassing retail and tourism, reflects disruption, though some companies, like Dubai food delivery firm Talabat, have seen share price increases.
Financial institutions across the Gulf are forecast to report single-digit declines in profits, attributed to lower fee income from reduced trade finance and credit card spending on international travel. The UAE's property markets are showing signs of strain, with potential negative impacts on expatriate inflows and tourism if regional tensions persist. Dubai residential sales in the second quarter were notably lower than pre-conflict levels.