The year 2020 has been difficult for stock markets and companies in financial and real estate sectors for Gulf Cooperation Council (GCC) countries due to the COVID-19 pandemic, the Kuwait Financial Centre Markaz reported on Tuesday.
According to the report, titled “Pandemic Resistant GCC Stocks,” companies in GCC countries that were impacted by the COVID-19 are mostly concentrated in sectors like financials, real estate, energy, industrials, and basic materials.
In addition, banks, non-banking financial institutions (NBFCs), investment companies, and real estate investment firms all have been hit hard by the COVID-19 crisis, Markaz said.
Reduced transportation as countries shut down borders affected the oil demand from the transportation sector and exacerbated the existing demand-supply mismatch, resulting in an oil price crash, it noted.
Lockdowns have affected the business of logistics, infrastructure, aviation, and manufacturing companies, it added.
Meanwhile, a minority of companies in GCC countries have not been affected by the pandemic, and they tend to be in sectors considered as essentials such as consumer non-cyclical, utilities, healthcare and telecom, it said.
Many of the companies in these sectors have seen their revenues and net income increase in the first quarter of this year over the same period last year, it said, noting that all of these sectors are driven by consumption needs that are resilient and are not dependent on the vagaries of the business cycle.
In addition, businesses, such as food and retail as well as companies in the utilities and telecom sector, also benefited due to their essential nature, it said.
The lockdowns imposed in the GCC countries have not affected them but instead resulted in increased revenues for these companies, and as a result, investors flocked to stocks in these sectors, it explained.
Established in 1974, Markaz is an investment management and research company in Kuwait.