Dubai firm using AI to plot corporate sentiment in the Gulf

Unsplash

• AI scanned and analysed 6.7m words in 1,300 earnings calls
• Sentiment declined in every sector apart from real estate

A UAE management consultancy firm is using artificial intelligence to help companies understand corporate sentiment across sectors and regions.

Iridium Advisors in Dubai uses AI analysis to scan and draw insights from 6.7 million words in 1,300 historic earnings calls from companies across the GCC, quantifying what management teams, investors and analysts are telling the market.

The firm, which specialises in investor relations, uses a variety of factors and sources to develop its sentiment index. 

• DIFC Courts investing in metaverse and blockchain
• Rise of the supercomputers: Gulf invests its oil profits in big tech

Certainty expressed by managers, their confidence, whether language is positive or negative, how complex the data and language are, and how much hard data is utilised in presentations all play a role in establishing sentiment.

All of these elements, Iridium’s CEO Oliver Schutzmann, tells AGBI, are important in getting to grips with the vast sets of data revealed in earnings calls.

“What we want to do is ultimately derive structured data from these huge amounts of unstructured texts that are ultimately spoken on earnings calls, to be able to read and decipher and make sense of the language that’s used in a manner that generates actionable insights,” Schutzmann said.

Fundamentally, he explained, it’s not just about what they do or do not say – it’s about how they say it. The traditional way of getting to grips with a company’s trajectory is listening in to these earning calls and going with your “gut feeling”. 

“The issue with that traditional approach is that forming an opinion of management is entirely subjective. It’s also extremely time-consuming if you have 80, 100, 200 companies reporting results.”

The company’s latest GCC report, released on Wednesday, reveals that sentiment expressed between October 1 and November 17 was down 8 percent across the board, but remained positive overall. 

The drop was particularly precipitous in Bahrain and Oman, while less steep, but still noticeable, in Saudi Arabia and Qatar. Kuwait and the UAE were the only countries that saw increases in overall sentiment, though they were slight.

The report said: “While GCC earnings call sentiment may have remained resilient during the first half of the year, the GCC market is not immune to equity market contractions in emerging and developed markets internationally, rising interest rates, inflationary pressures, oil price volatility and fears of recession.”

Commenting on the report’s findings, Schutzmann said: “We detected a decline in the confidence level of management teams during the last quarter, and that’s what led then to the actual sentiment decline.

“We’re now at an inflection point, where everybody’s starting to realise that this music that has been playing for quite a long time, all these things that have been happening around the world – declining oil prices, inflationary pressures etc – are all coming together, and it’s not 100 percent clear what the direction of travel is from here.”

While sentiment declined in almost every sector – from energy, finance and manufacturing to hospitality – sentiments from real estate earnings calls actually improved.

Iridium’s positive view of sentiment in the GCC’s property industry is backed by a recent report by Knight Frank, who expect Dubai’s mainstream residential market to register price increases of 5 to 7 percent by the end of 2022, and predicts a similar rate of growth in 2023.