Middle East markets are again finding themselves in the focal point of investors and companies targeting opportunity, growth, and funding in 2024, following the region’s strong performances in 2022 and 2023. Now, investors are eager to see if momentum can be sustained or if geopolitical dynamics will hinder growth. This means that clients, employees, and stakeholders are monitoring business activity and communications as a barometer for stability – and keeping a close eye on what businesses are doing to hedge against risks and how they are future-proofing their business models.

Significant activity in public listings was seen across the Gulf, be it on Saudi Arabia’s Tadawul, the UAE’s ADX and DFM, or Oman’s MSX. Saudi Arabia saw the most public listings in the Gulf, counting 39 IPOs on its Tadawul stock exchange in 2023 and raising $3.6 billion across various sectors. Meanwhile, the UAE counted eight IPOs which cumulatively raised an impressive $6 billion. Oman also saw historic activity with the $750 million listing of OQGN, which was the biggest IPO in the Sultanate’s history.

The 2024 pipeline remains promising, with more IPOs across the GCC expected to launch from Eid to summer. In total, 27 companies have already announced plans to list on Tadawul, and various state-owned and private companies are expected to go public in the UAE, with several listings having been pushed back from 2023.

This optimism stands in stark contrast to the geopolitical risks which are testing the region’s resilience, such as disruptions by Houthi attacks on global shipping routes in the Red Sea. With investors avoiding unstable markets and disruptions in trade having the potential to lead to an economic slowdown, the impact of these geopolitical challenges should not be understated and can have detrimental effects on investor confidence and enthusiasm, meaning companies in the region may find it harder to attract investors for their IPOs. While the region’s financial markets have thus far remained resilient and investor sentiment remains positive, effective communication and transparent information sharing will be crucial for maintaining investor confidence even in times of market volatility or inflation and monitoring market sentiment to address concerns head-on will be more important than ever.

SWFs driving regional M&A activity

Generally, the region has exceeded expectations in recent years, with economic diversification efforts, such as Saudi Arabia's Vision 2030 and Oman's Vision 2040, yielding positive results. This progress is supported by local entities and sovereign wealth funds (SWFs), which are fostering cross-border investments and acquisitions. Regional M&A activity in 2023 proved robust - spurred by significant activity and deals by SWFs, such as Saudi Arabia’s $700 billion Public Investment Fund. Gulf-based SWFs offer deep pools of capital – across the GCC these funds boast over $3.7 trillion in total assets under management, with much of the capital not yet allocated, providing ample opportunities for businesses seeking growth.

This regional activity is met by an expected increase in cross-border M&A deals, such as PIF’s $4.9 billion takeover deal of US-based interactive entertainment company Scopely in 2023. Again, geopolitical challenges have the potential to disrupt in 2024 by increasing uncertainty and making it harder for companies to raise the necessary capital for transactions as well as shifting strategic priorities. Here too, communications will play a vital role in ensuring transparency and building trust.

In this increasingly fluid context, businesses operating in the Middle East need to remain nimble and cautious. Frequent change requires frequent communication to reassure stakeholders – both within the organization and outside. More than ever, communication strategies need to remain agile to rationalize company activities – in times of commercial success and during challenging times. Investor and analyst relations also need to be carefully managed, as complacency can lead to share price erosion.

For businesses in the Middle East, effective communication will play a crucial role in managing stakeholder expectations and maintaining investor confidence during major transactions in 2024. By crafting a clear and compelling narrative, companies can navigate potential challenges, such as market volatility or geopolitical uncertainties, while also rationalizing the strategic benefits of transactions. Transparent and timely information-sharing with employees, investors, regulators, and the broader market can help create a strong long-term foundation for future growth and success.

Through both periods of growth and uncertainty, external communications will be a lynchpin to enhance and shape market perception. So far, it seems players in the Gulf are set for success in 2024 - strong communications strategies will help prepare them for all potential situations and strengthen their resilience.  

Key organizational considerations to help manage change:

• Adapt your strategy: Are you course-correcting your strategy to address turbulence and considering how geopolitics has changed your company’s performance or whether it necessitates a strategy change?
• Educate your stakeholders: Has the context changed for shareholders, employees, suppliers, and customers? Are you addressing concerns voiced by media, markets, regulators?
• Update and enhance your corporate narrative: What elements of your messaging no longer ring true —and which elements are essential to inspiring trust?
• Become hyper-responsive: What media and regulatory monitoring services are needed and who is the designated point person to respond to inaccuracies and questions? 
• Empower communications leadership: Who are your spokespersons and what topics will they address – have any of them lost credibility? Are they equally comfortable in appearing in print and broadcast formats?