GCC Markets Continue To Suffer From Poor Research Coverage


According to a recent research published by Kuwait Financial Center “Markaz”, equity markets witnessed lowered level of attention in 2H11, compared to the previous half as measured by number of equity research reports published. Fifteen brokers published 208 research notes on 113 companies during 2H11, compared to the 480 research notes published in 1H11. During the second half, 17% of all GCC companies received research coverage, representing 77% of the total market cap. Saudi Arabia, which continued to attract the most attention, accounted for 33.6% of research notes, followed closely by the UAE with 26.4%. Analyst sentiments were polarized in GCC markets, with 59% “Buy” calls, 4% “Sell” calls, and 37% “Hold”.

Source: Reuters Eikon, Zawya Investor, Markaz Research
Note: Figures represent freely accessible research notes

The market cap of researched companies in KSA accounted for 76% of the total domestic market capitalization. This was followed by Oman (74%), Qatar (72%), UAE (64%), Kuwait (61%) and Bahrain (10%). Qatar was the most researched country in terms of percentage of companies covered to total companies listed in the country. About 30% of all listed companies in Qatar received coverage in 2H11.

Qatar was also the most preferred equity market in 2H11, with 71% of the reports receiving “Buy” ratings. On the flip side, Oman had a majority of “Hold” calls, at 52% and Saudi Arabia received the most “Sell” calls at 7%.

The number of research notes on Saudi firms (as a percentage of total GCC coverage) increased from 29% in 3Q11 to 42% in 4Q11. However, the same for Kuwait decreased from 20% in 3Q11 to 8% in 4Q11.

Banking continues to be the most researched sector with 64 notes; 28 of these were “Buy” calls, 4 were “Sell” calls, while the remaining were “Hold” calls. After Banking, Telecommunications was the most researched sector with a total of 24 research notes. Analysts were bullish on transport sector - 89% of research notes in 2H11 were “Buy”

First Gulf Bank was the top researched stock with 7 research notes in 2H11 followed by Almarai, Etihad Etisalat, Saudi Telecom and Arabtec Holding with 5 notes each. First Gulf bank, with 6 “Buy” recommendations, was also the stock with most number of “Buy” ratings.

National Real Estate Company which received a single “Buy” rating in 2H11 gained 65.3% since the recommendation and emerged as the best “Buy” pick. Yanbu Cement emerged as the second best “Buy” stock with 48.7% gain since the recommendation. The worst “Buy” call was on Aldar properties, which lost 28.9% since the call. This was followed by Dana Gas, which lost 27.42% since the first recommendation.


About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', established in 1974 with total assets under management of over KD 865 million as of December 31st, 2011, is the leading and award winning asset management and investment banking institution in the Arabian Gulf Region. Markaz is listed on the Kuwait Stock Exchange (KSE) since 1997 under ticker Markaz.