Mubasher: Moody's Investors Service assigned a negative outlook for Middle Eastern, South African and Turkish companies in 2017, according to a report issued on Thursday.
The main drivers behind this negative outlook are low economic growth, weak consumer and business confidence, and foreign exchange volatility, the reported explained, expecting some companies, namely in Turkey, to remain resilient, though.
GCC companies, namely oil and gas ones, are to be hurt by low oil prices that are limiting growth prospects companies' financial buffers, said Moody’s.
In addition, liquidity is forecast to be tightening, but manageable for large companies, the rating agency added.
Meanwhile in South Africa, companies will be affected by political political uncertainty, weak consumer consumption and low capital investment spend, rand volatility, and, most importantly, the low growth environment with Moody's GDP growth expectations of 1.1% for 2017.
"Our overall negative outlook for Turkish, Middle Eastern and South African companies in 2017 is driven by weak consumer and investor confidence, continuing currency volatility and varying geopolitical risks. However, some corporates including Turkish investment grade rated names remain relatively resilient to domestic economic slowdown by virtue of their market leadership positions, strong balance sheets, healthy liquidity and manageable FX exposure," said Rehan Akbar, a Moody's Assistant Vice President, Analyst and author of the report.
