Kuwait Financial Centre “Markaz” recently released a semi-annual review of its “What to expect in 2011” report in which the authors discussed the myriad triggers which negatively impacted the GCC markets in 1H11 and how they altered Markaz outlook on the markets for the remainder of 2011.
In Markaz’s previous note, the authors had upgraded their outlook to a mostly Positive view on the region. This was due to many factors including; healthy economic growth, expected recovery in key sectors like Banking and Real Estate in addition to healthy valuations. The report had a Neutral stance on Dubai (due to persisting debt overhang and a struggling Real Estate sector), Bahrain (due to lesser corporate recovery), and Saudi Arabia (due to muted banking performance and investor sentiment).
Since then, the political turmoil which swept the region at the beginning of the year brought down all markets and proved a drag on earnings. Additionally, various corporate issues (in terms of M&A, debt restructuring etc) in addition to some regulatory and market developments (Kuwait CMA, MSCI not upgrading of UAE and Qatari markets etc) has dampened investor sentiment across the board.
Previous Recommendations & Market performance
2011 Return (YTD %)
*Kuwait Weighted Index return
Source: Markaz Research, Stock Exchanges: Tadawul, Kuwait Price & Weighted Indices, ADX, DFM, DSM, MSM, BAX
Note: All indices use a market cap weighted methodology except Kuwait which also uses a Price index. Hence, we have shown both for Kuwait.
Earnings Growth Potential
Overall Market View
Our funds enjoy a solid track record, including one "A" rating, Gold and Silver by S&P and Twelve Lipper awards