GCC equity funds bounce back along with the market


In a recently published quarterly report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of over 150 equity funds across the region, GCC markets were positive in the third quarter as all markets saw gains following a lackluster summer and slow Ramadan month; the Dubai World debt issue was resolved with the bulk of creditors coming on board for the restructuring. Positive ratings and economic news also lifted sentiment across the Gulf in addition to increasing crude oil prices. MSCI GCC gained 10% for the quarter, with a YTD gain of 8.5% at the end of September. Kuwait was the front-runner as positive corporate news, specifically pertaining to Zain Group, boosted the market; the MSCI index was up 25.5% for the quarter.

GCC Equity funds had an asset weighted gain of 9% in September, reversing the 8% loss of June as positive markets boosted performance across the region. AUM’s was at USD 12 bn in 3Q10, representing an institutionalization rate (AUM/Mcap) of 1.6%. Riyad Capital tops the AUM list in the region followed by HSBC and Markaz.

Assets under Management – September 2010

Fund managers continue to favor Saudi Arabia, with an allocation of 42% though down from 45% in June 2010. Allocation to Kuwait and Qatar were up 2% each to 14% and 17%, respectively, while exposure to MENA increased to 13% from 8%.

Geographical Allocation - Equity Funds

Risk aversion was down in September as fund managers upped Equity allocation to 93% while exposure to cash was down to 7%. Saudi Arabia’s Tadawul All-Share Index (TASI) gained 4.35% in 3Q2010 against a 10% loss in 2Q10 as petrochemicals recover. The top three conventional Funds outperformed the MSCI Saudi Arabia Domestic Index which gained 4.35%, moreover In September; fund managers maintained a 1% allocation to cash (on an asset weighted basis) and held 99% of assets in equities. AUM’s increased to USD 4.76bn in 3Q10 from USD 4.66 bn in Q210. AL Musahem Fund of Samba was the best performing conventional fund for the quarter with a gain of 7.99%. The Kuwait Index ended the quarter with a gain of 6.75% against a loss of 13% 2Q10.The strong comeback of Kuwait market was under pinned by many developments including government spending (titled Kuwait development plan) and Zain deal with Etisalat (UAE).

Top Five Equity Fund Managers in Kuwait (in terms of AUM in September 2010)

In Q310 Qatar gained 10.26% After losing 7.5% in 2Q10. AUM’s for Qatari equity funds Jumped 145% to USD 365mn from USD144mn, moreover, The top conventional and Islamic funds outperformed their respective benchmarks. Qatar Gate Fund (Q) (Shuaa Capital) was the top performer with a gain of 11.39%. The fund had a 99% exposure to equities and 1% in cash with a fund size of USD 5mn.

The UAE Conventional and Islamic index outperformed fund managers in 3Q10, MSCI UAE conventional index gained 16.3% while the best performing fund for the quarter gained 13.5% [Makaseb Emirates Equity Fund] on the other hand the MSCI UAE Islamic Index gained 15.3% while NBAD’s UAE Islamic fund gained 4.7%. The MSCI Oman index gained 4.8% in 3Q after losing 9.5% in 2Q10. AUM’s for Omani equity funds jumped 45% to USD 74mn. Two Omani funds outperformed the index in the third quarter. The best performing fund was Muscat Fund (Bank Muscat) which gained 6.27% for the quarter The Bahrain Exchange gained 4.96% in 2Q10 after losing 9.75% in the previous quarter. Bahrain AUM’s were at USD 20 mn in 3Q10 a 5% gain from the previous quarter. SICO Selected Securities Fund gained 3.03% for the quarter.

About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.03 billion (USD 3.64 billion) as of September 30, 2010, 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.