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Turkish, RSA companies in for tough 2019, but Gulf companies should be ok

Publication Date: 21 Dec 2018 - By ReachX Team By ReachX T.

Macro Equity Fundamental Multi Asset Other Middle East


The outlook for non-financial corporates in both Turkey and South Africa remains negative for the coming 12 to 18 months, according to a leading rating agency. 

In a recent note to clients Moody's Investors Service said: “While the outlooks for companies in Turkey, South Africa and Gulf Cooperation Council (GCC) remain unchanged versus last year, the diverging regional trends will continue into 2019."

Rehan Akbar, regional Vice President at Moody’s outlined the key drivers of the negative outlooks as below:

• For Turkish companies, high foreign exchange volatility, tighter financial conditions, and the limited clarity on policy direction. The impact of these factors are compounded by Moody's expectation of economic contraction in 2019.
• For South African companies, the country's persistently low growth, and continued political and policy uncertainty, which has depressed business and consumer demand.

Conversely, the drivers of the stable outlook on GCC companies are the generally supportive oil prices, resulting in narrowing fiscal deficits, coupled with governments' ongoing commitment towards public spending and their supportive stance towards government-related issuers.

GCC member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.


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