Business | Markets

Goldman Sachs says capital cost will hit growth

Goldman Sachs revised its ratings and price targets on several stocks in the Gulf Cooperation Council (GCC), citing challenging international credit market conditions during the second half of 2008 that have begun to impact the region.

  • Agencies
  • Published: 00:08 October 25, 2008
  • Gulf News

Dubai: Goldman Sachs revised its ratings and price targets on several stocks in the Gulf Cooperation Council (GCC), citing challenging international credit market conditions during the second half of 2008 that have begun to impact the region.

"We believe that the increase in the cost of capital will have a negative effect on growth in general," Goldman said in a research note to clients.

It, however, added that the outlook for GCC economies was more positive than that for many other regions due to strong fiscal and current account balances, substantial sovereign wealth and high levels of investment.

Emphasis on conserving

In the past month, Gulf central banks and governments have formulated separate responses to the crisis, including guaranteeing deposits, easing lending curbs, setting up emergency funds and pouring money into ailing stock markets.

Goldman noted that companies with the ability to conserve cash were best positioned to ride out the storm until credit conditions improved.

The brokerage said companies with net cash positions on its 2008 forecasts included Emaar Properties, Abu Dhabi National Hotels, Arabtec, Agility, Aramex and Air Arabia.

The stock that stands out as a risk is Tabreed, since it has substantial upfront capital requirements and may face difficulties in increasing its balance sheet leverage, Goldman said.

  • Rate this article
  • Average reader rating (6 votes) 5 Stars
Tools

Emailing an article to friend is a simple way to share a news item. Your friend will receive an email with your name and email address as well any personal message you choose to send.

The information you provide on this page will not be used to send unsolicited emails.

This service is not intended to encourage spam, and action may be taken against individuals who maliciously enter personal details of another individual.

Share this article

More from Markets

  1. Market volatility 'is overreaction'

  2. Volatile week awaits investors

  3. Risk aversion could trigger stock correction

  4. How to manage portfolio for better index returns

All articles in Markets

More from Business

Gulf News
Popular in Business
Airlines in the region
Budget travel

Airlines in the region

Take a pictorial look at some of the budget airlines in GCC

Business Editor's choice