Iridium Quant Lens points to early signs of recovery from GCC earnings calls in Q2 2020

Iridium Advisors’ new AI-powered Sentiment Index of GCC company earnings has detected early signs of recovery from the Covid-19 slump. Iridium's Quant Lens algorithms analysed management, analyst and investor commentaries from quarterly earnings calls to calculate the new Sentiment Index.

While the decline in the Sentiment Index in 1Q 2020 was widespread and felt almost equally across all Arabian Gulf countries, for the 2Q 2020 earnings cycle, it recovered in Saudi Arabia, United Arab Emirates and Qatar, but continued to decline in Kuwait.

Iridium Quant Lens also found that not all sectors were equally impacted by Covid-19 during the last two reporting cycles. The Consumer Discretionary sector showed the largest drop in sentiment of 44 points in 1Q and 2Q 2020 combined. The next most affected sector was Real Estate, followed by the Energy, Communications and Financials sectors. During this period, sentiment for Consumer Staples and Utilities, being more defensively positioned against Covid-19 disruption, held up relatively well, with sentiment scores in 2Q 2020 at levels close to those at the beginning of the year.

Oliver Schutzmann, CEO of Iridium Advisors, said: "With the 2Q 2020 earnings cycle now behind us, we see early signs of recovery during the 2Q 2020 earnings cycle with a 7-point rise in sentiment to +9 points compared to the previous quarter. To put this into perspective, the Sentiment Index reading was +2 points for the 1Q 2020 reporting cycle, a 25-point decline from 4Q 2019 levels, and the lowest level observed over the last five years."

The Iridium Quant Lens natural language processing algorithm automates earnings call analysis by quantifying language at a scale and speed that is impossible to replicate by the human brain. To date, it has processed over 3.28 million words from more than 550 earnings call transcripts, representing 75% of the market capitalization of listed companies across eight stock exchanges in the GCC region. The algorithms generate insights from sentiment expressed by management, analysts and investors, the language complexity used, as well as the number of financial metrics conferred during earnings calls.