Middle East CFOs’ Optimism Highest In Three Years- Study

Optimism among chief financial officers (CFO) in the Middle East was at its highest level in the last three years despite the political turmoil in the region, according to the latest Global CFO Signals survey by audit firm Deloitte.

As per the survey, 47 per cent of CFOs polled in the Middle East during the third quarter were more optimistic about the financial prospects of their companies, compared with the previous six months.

About 125 CFOs from both listed and non-listed companies participated in the survey, Deloitte said.

“The disparate nature of the countries, their economies, and rates of growth across the region is reflected in the responses of CFOs at that time, with the strongest optimism coming from those in the Gulf countries where economic growth is the strongest,” said James Babb, Deloitte Middle East CFO Program leader.

In the UAE, around 62 per cent of CFOs reported a rise in optimism whereas respondents in Syria and Lebanon did not report an increase in positive sentiment, Babb said.

The survey also noted that CFOs were prioritising organic growth by focusing on launching new products and expanding into different markets.

Middle East CFOs also expect the equity issuance and M&A activity to increase over the next year, the study said. Almost 61 per cent of the respondents said that they would consider these transactions in order to streamline current offerings rather than diversify their operations.

In addition, about 52 per cent of CFOs in the region believed that major equity indices will continue to grow over the next year.

Bank borrowing and capital expenditure were identified as the key business metrics most likely to increase over the coming year by those polled, the survey said.

Another notable rebound in CFO sentiments during Q3 was the appetite for risk, according to Deloitte. When asked if it was a good time to be taking greater risk onto the balance sheet, 45 per cent of CFOs agreed, marking one of the highest levels since the first half of 2011.

“Low interest rates are among the driving factors causing this increase in risk appetite,” said Babb.

“This coupled with the perceived higher availability of credit seems to been couraging CFOs to be less risk averse than in the past few years.”