Markaz Kuwait KSA and Dubai markets register gains for March

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Markaz: Kuwait, KSA and Dubai markets register gains for March 10 - Apr - 2014

Kuwait Financial Centre “Markaz” recently released its Monthly Market Research report. In this report, Markaz examines and analyzes the performance of equity markets in the MENA region as well as the global equity markets.

Equity markets from the MENA region were wobbly as most indices ended the month on a negative note. Dubai, Saudi Arabia and Kuwait markets ended on a positive note as the former market rose by 5.5 per cent, buoyed by the performance of banking and property stocks.

The S&P GCC index moved up 3.1 per cent in the month of March to close at 131 points. The S&P Pan Arabian Composite LargeMid Cap Index rose by 3.9 per cent to close at 182 points. While overall market liquidity improved in the region, value traded declined in Abu Dhabi, Oman and Dubai.

P/E of Jordan remained unmoved, while valuations of the rest of the MENA countries changed. P/E of Dubai, Abu Dhabi and Oman witnessed a steep drop in the month of March. Despite which the Dubai index has the second highest P/E ratio of 18.2x, bested only by the Kuwait Weighted Index at 18.5x. Bahrain, Jordan, Qatar, and Oman have dividend yields over 4 %. With relatively low P/E values and high dividend yields, Bahrain, Jordan and Abu Dhabi markets might be offering value. Morocco, Saudi Arabia and Qatar have high price-to-book ratios (around 2x), while Jordan and Bahrain have low P/B ratios.
 
The value traded in the MENA markets rose by 13.4 per cent in March, to USD 63billion compared to USD 55.5billion in February. Saudi Arabia and UAE together account for 73 per cent of the total value traded in the MENA region. Bahrain, Jordan, and Morocco together contributed less than 1 per cent to the total value traded in March. Kuwait, Saudi Arabia and Egypt witnessed the biggest month-on-month increase in value traded at over 30 per cent each respectively.

IPO: Gulf Marine Services and Mesaieed Petrochemical Holding Company were listed in the London Stock Exchange and the Qatar Stock Exchange on the 19th of March and the 26th of February of 2014. The former issued 122,735,402 shares, representing a 35.11 per cent stake, for GBP 165.7mn. While the latter issued 323,190,000 shares, representing a 25.7 per cent stake, for QR 3,296.5mn.

Global equities maintained level in March, as the MSCI world index dropped a point to close at 1674. Despite the manufacturing PMI in China falling to an 18-month low of 47.3, emerging markets continued to rise, as the MSCI EM index ended the month at 995, rising by 3 per cent. Mixed results were seen in China and India as the Shanghai index fell by 1.1 per cent, while the BSE Sensex (India) rose by 6 per cent in the month of March, due to lower inflationary pressures.  Unemployment in Japan fell to its lowest in six years, while consumer price inflation rose for a ninth consecutive month, increasing to 1.3 per cent in February, still below the 2 per cent target. Nikkei Index closed the month at 14,828 points, falling 0.1 per cent from February.

IPE Brent continued to slide in the month of March, posting a drop of 2.7 per cent for the first quarter of 2014, as manufacturing sector in China, the world’s largest energy consumer, continued to worry investors. Oil prices continued to remain above USD 100/bbl at month’s close, closing at USD 107.76/bbl, despite the drop in value. Gold prices witnessed a 3.2 per cent slide in March, closing at USD 1284 down from USD 1326 in February.

Weaker consumer spending data, durable goods orders in February coupled with interest rate uncertainty, led to a tepid rise of 0.7 per cent in the S&P 500 index. Fed chairwoman Janet Yellen had suggested that rates will rise six months after tapering of the Fed’s monthly asset purchase programme is completed, which indicates that rates will begin to rise around May 2015. Investors moved away from growth stocks to value stocks as domestic economic outlook remains unclear.


MENA Index Returns

Index M. Cap (USD Bn) Last close 2013% Mar 14% YTD % S&P correlation** ADVT* (USD mn) P/E TTM P/B TTM Div.
Yield
S&P Pan Arab Composite LargeMid Cap Index 142 182 32.2 3.9 13.5 0.083 N.A 16.53 1.82 2.65
Saudi Arabia 511 9,474 25.5 4.0 11.0 0.108 1417.65 16.37 2.32 3.14
Qatar 135 11,640 24.2 -1.1 12.1 0.050 150.05 14.78 1.92 4.29
Abu Dhabi 125 4,894 63.1 -1.3 14.1 0.010 195.19 13.29 1.66 3.87
Kuwait Wt.ed 114 483 8.4 3.9 6.7 0.053 75.22 18.52 1.45 2.71
Dubai 83 4,451 107.7 5.5 32.1 0.076 485.70 18.23 1.58 2.49
Egypt 68 786 22.6 -1.7 16.3 0.015 108.42 12.46 1.80 3.03
Morocco 58 9,519 -2.6 0.8 4.4 0.083 6.79 16.14 2.29 3.95
Jordan 22 4,528 -5.6 -0.3 4.4 -0.029 12.92 14.24 1.28 4.74
Bahrain 20 1,357 17.2 -1.1 8.7 0.012 2.86 9.54 1.03 4.84
Oman 18 6,857 18.6 -3.6 0.3 -0.006 78.25 10.26 1.58 4.11
 
Source: Reuters, Markaz Research, * - Monthly Average Daily Value Traded, ** - 3-year daily return correlation

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About Markaz
Kuwait Financial Centre 'Markaz', with total assets under management of over 975 million as of December 31, 2013, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.