Gulf CEOs urged to conquer fear of earnings call

February 25, 2025, 11:28 AM

The absence of earnings calls 'may discourage investors from buying' a Gulf stock, says one analyst

Only 1 in 7 listed companies host calls
Executives ‘fear tough questions’
But analysts say concern is misplaced

Earnings calls for analysts, reporters or investors are a staple for listed companies in Western markets. The same is not true in the Gulf, however, and experts say that can make it harder to assess a company’s performance and justify its stock valuation.

It can also deter institutional investors, limit liquidity and slow market growth.

“The Gulf has made progress but it still lags [behind] developed exchanges like New York and London, where full earnings call transparency is standard,” Oliver Schutzmann, CEO of investor relations adviser Iridium, tells AGBI.

“Even in India and China, earnings call participation is significantly higher.”

In the Gulf, only 10 earnings-call transcripts were available per quarter in 2015, according to Iridium. That number has since risen to more than 120 per quarter, but this still represents just one in seven of the region’s 877 listed companies.

An Iridium study of 350 active emerging markets funds, which manage more than $400 billion, has found that only about 56 percent have invested in Saudi Arabia and the UAE – signalling the untapped potential.

Companies that hold earnings calls tend to attract stronger research coverage, higher liquidity and better stock valuations, Schutzmann says, citing Iridium’s analysis of 10 million data points from more than 1,000 banks in 100 countries.

“Hosting earnings calls is hard,” Schutzmann says. “It takes weeks of preparation and many companies still believe they must always project positivity, which is a misconception.”

He believes companies’ main concern is Q&A sessions, “where executives fear facing tough questions from analysts”.

For Amer Halawi, head of research at UAE brokerage and investment firm Al Ramz Capital, the “reluctance is part culture, part habit. Middle Eastern markets prioritise privacy and listed companies generally say too little to shareholders.”

Better investor relations will help valuation multiples for Gulf businesses, Halawi says. “Their absence is a significant barrier to entry and may discourage investors from buying into a stock.”

The issue is compounded by lack of research.

“Many companies in the region have little sell-side analyst coverage, which results in low institutional investor participation in earnings calls,” says Paolo Casamassima, CEO of the Middle East Investor Relations Association.

“Some companies hesitate to engage with retail investors because they see minimal strategic benefit.”

Others actively avoid earnings calls to sidestep tough questions or prevent negative market chatter, Casamassima says.

Kuwait and Qatar have already made earnings calls mandatory, but Saudi Arabia and the UAE – the Gulf’s largest capital markets – have yet to impose similar rules.

Equity analysts struggle to produce deep-dive reports when access to management is limited, says Nishit Lakhotia, head of research at Bahraini investment bank and asset manager Sico.

“Without interaction with management, analysis can only make high-level assumptions,” Lakhotia says. “As a result, many mid to small-cap companies lack sufficient sell-side coverage.”

With most exchanges in the six-member GCC classified as emerging markets – or working to achieve that status – adequate disclosures are crucial if they are to attract large investors, according to Lakhotia.

“Earnings calls and management access are critical for the proper understanding of a company’s equity story,” Halawi says. “The better we understand it, the better we can value it.”