The GCC markets exhibited strong performance in April 2008, with all markets posting positive returns. Qatar’s Doha Stock Market (DSM) was the best performing market with MoM returns of 18.2% . This was a strong comeback by the Qatari market, considering that it had recorded a loss of 8.8% in March. After posting two double-digit losses of 13.4% and 11.4% in January and March respectively, the Saudi market bounced backed and registered double-digit gains of 11.9% in April. Kuwait, continuing with its growth momentum in April, recorded the fifth consecutive gain with a MoM return of 2.8%. The UAE posted a MoM gain of 7.6% in April that was supported by Abu Dhabi Stock Market Index (ADSMI)’s and Dubai Financial Market (DFM)’s gains of 9.5% and 7.2%, respectively. While UAE made the highest contribution to the total volume traded and surpassed last month’s topper Kuwait, Saudi Arabia maintained its position and recorded the highest total value traded amongst the GCC markets in April . Table 1: Market Indicators Indicators M. Cap (USD Bn) Last Close April 08 % YTD % 07 % P/E 07 P/E 08 Saudi (TASI) 490 10,066 11.94 -8.81 41 20 19 Kuwait (KSE) 214 14,755 2.82 16.98 34 13 11 Abu Dhabi (ADI) 124 4,988 9.49 9.60 52 17 13 Dubai (DFMGI) 110 5,737 7.21 -3.27 51 22 - Qatar (Doha SM) 127 11,289 18.15 -0.27 34 17 12 Bahrain (BAX) 29 2,841 1.85 3.13 24 8 7 Oman (Muscat SM) 28 11,210 10.96 24.08 62 13 12 MSCI GCC 752 768 9.23 -4.36 47 19 14 Source: Excerpt from Markaz “Daily Morning Brief” May 1, 2008 CY08 Estimates are Markaz Earnings Estimates Table 2: Volume and Value Traded Indicators Volume Traded (Mn) % Of Volume Traded Volume LTM Avg. (Mn) Value Traded (USD Mn) % Of Value Traded Value LTM Avg ($ Mn) Saudi Arabia 5,393 21% 4,640 53,801 61% 51,882 Kuwait 8,593 34% 7,232 13,269 15% 13,131 UAE 10,378 41% 11,829 14,200 16% 12,993 Qatar 409 2% 318 5,162 6% 3,268 Bahrain 94 0% 113 101 0% 142 Oman 558 2% 359 1,082 1% 620 Total 25,424 87,615 Source: Respective Stock Exchanges, Markaz Research; LTM refers to Last Twelve Months Volatility The GCC markets (except Qatar) exhibited a decline in volatility levels in April 2008. Qatar registered a 9% increase in volatility compared to March 2008, when it had recorded a 10% decline. Among the GCC countries, UAE recorded the sharpest fall in volatility, with Abu Dhabi and Dubai registering 40% and 38% decline in volatility, respectively. S&P 500 and Emerging Markets (EM) showed a significant decline in volatility compared to March 2008 . Among all the tracked markets, China was the most volatile with a 23% MoM increase in volatility. Furthermore, it was the only market to trade higher than its 120-Day Moving Average and its current MVX is close to its all-time historic high. Correlation Short-Term 1Y Correlation (May 2007–April 2008) Saudi Arabia Kuwait Dubai Abu Dhabi Qatar Oman Bahrain S&P 500 GEM* Saudi Arabia 100 Kuwait 11 100 Dubai 29 22 100 Abu Dhabi 28 28 69 100 Qatar 20 19 36 47 100 Oman 25 14 32 40 33 100 Bahrain 5 24 10 13 19 10 100 S&P 500 4 4 2 1 1 8 3 100 GEM* 16 10 19 20 21 15 4 30 100 In the short-term, Abu Dhabi and Qatar enjoyed a near 0 correlation to S& P 500. The short-term correlation of Saudi Arabia with other GCC nations (except Bahrain) increased in April as compared to March 2008. Among all the GCC markets, the correlation of the Kuwaiti market with Saudi Arabia and Qatar increased the maximum. While the correlation of Kuwait with Saudi Arabia rose 370 bps, the correlation of Kuwait with Qatar increased 280 bps (Table 3). The correlation of GCC markets with the S&P 500 market continued to be low in April. However, barring Saudi Arabia, the correlation of the S&P 500 market with the other GCC markets increased in the range of 100–200 bps. Source: Markaz Research; *: Global Emerging Markets Saudi Arabia Saudi Arabia’s Tadawul All Share Index (TASI) recorded its strongest gains in 2008, with returns of 11.9% in April. However, due to poor performance in the January and March, the TASI posted a YTD loss of 8.8% in April. Though volumes traded for the month of April increased to 5,393 Mn as compared to 4,242 Mn in March, LTM average volume traded decreased slightly to 4,640 Mn from 4,693 Mn in March . Among heavyweights, the Saudi Basic Industries Corp. (SABIC) stock was up 7.0% for the month of April, as the company posted a net profit of SAR6.92 Bn, a 10% y-o-y rise in Q1 2008. Saudi Telecom Co. (STC)’s first quarter 2008 profit rose 11% from SAR2.72 Bn in Q1 2007 to SAR3.03 Bn as it added new subscribers. STC’s subscriber base increased 23% during the same period. The stock rose 10.5% during the month. Al Rajhi Bank’s first quarter profit rose 2.1% y-o-y to SAR1.6Bn led by growth in its lending business and the stock rose 15.3% during the month. Samba Financial Group recorded a 5.4% y-o-y decrease in its first quarter profit to SAR1.2 Bn due to lower bourse-related revenues. However, the stock recorded gains of 31.8% in April. Kuwait The Kuwait Stock Exchange (KSE) gained momentum this month following strong first quarter results. KSE remained upbeat and posted a gain of 2.8% in April as compared to a gain of 2.0% in March 2008. While the volume traded for April increased to 8,593 compared to 8,245 in March, the value traded for the month decreased to USD13,629 Mn from USD14,907 Mn in March . Mobile Tele-communications Company (ZAIN)’s net profit grew at a slower pace of 2.7% to KD73.3 Mn. The company attributed the slow growth to its rapid expansion in Africa and the Middle East and expects these investments to pay off from 2009. ZAIN expects its net profit to rise by a little more than 5% in 2008 compared to 2007. On this news, the stock lost 5.6% during the month. Kuwait Finance House (KFH)’s stock price rose 4.9% in April due to strong results. KFH posted strong profits in the first quarter due to the continued growth in demand for Shariah-compliant services in Arab and Asian countries . KFH’s net income in Q1 2008 surged almost 43% y-o-y to KD73.4 Mn. Public Warehousing Co. (AGLTY) aims to sell shares worth about KD120 Mn this year to finance its expansion and reduce dependence on US Army contracts. National Bank of Kuwait (NBK) recorded a 28% y-o-y jump in profit from KD64 Mn to KD82 Mn in Q1 2008 after adding income from overseas operations, including those in Egypt, Qatar and Turkey. However, the stock ended flat for the month as it closed at Fils1,980. UAE The UAE stock market registered a strong return of 8.1% in April. The ADSMI and DFM contributed to the overall UAE index by posting gains of 9.5% and 7.2%, respectively, in the month. While the volume and value traded for April increased 48% and 42%, respectively, concentration of Top five companies (in terms of Market Cap) increased by 1 percentage point . Among blue-chip companies, Emirates Telecommunications Corporation (Etisalat) posted record profit in Q1 2008 after adding more mobile phone users in the UAE. Net income in Q1 2008 rose 15.5% y-o-y to Dh2.1 Bn. The Company is looking to foray into the high growth Indian telecom market, and has held talks with several companies. The stock recorded MoM gain of 9.7% and YTD gain of 13.0% in April. Heavyweight banks exhibited good performance in April driven by strong quarterly results. The banking indices of ADSMI and DFM were up 8.0% and 5.3%, respectively. National Bank of Abu Dhabi (NBAD) was up 8.0% for the month as it reported 45% y-o-y increase in its net profit to Dh875 Mn in Q1 2008. Dubai Islamic Bank (DIB)’s stock was up 0.4% in April after it recorded a 31% increase in its first-quarter profit to Dh556 Mn. The bank increased its lending, especially to the UAE’s booming realty sector. Emirates NBD (ENBD)’s net profit grew to Dh1.2 Bn during the first quarter of 2008 from Dh874 Mn in the same period last year. The ENBD stock posted a monthly gain of 4.3%. Qatar Qatar’s DSM was the best performing market in the GCC region with MoM returns of 18.2% in April. The DSM registered a YTD return of 17.8% even though it lost 8.8% in March 2008. Volume and value traded during April increased to 409 Mn and USD 5,162 Mn respectively. The top five stocks contribution to market volumes too increased from 59% in March to 62% in April. Among heavyweights, Industries Qatar (IQCD) and Qatar Islamic Bank (QIBK) performed well with MoM gains of 36.3% and 28.5%, respectively primarily attributable to strong earnings growth. In Q1 2008, Industries Qatar’s net profit rose 111% y-o-y to QAR1.9 Bn, while Qatar Islamic Bank’s profit surged 69% in Q1 2008 to QAR455.5 Mn from QAR270.2 Mn a year earlier. Telecom giant Qatar Telecom also posted double-digit growth of 10.6% during the month. Qatar National Bank (QNBK)’s profit rose 40.5% to QAR917.3 Mn in Q1 2008. The market gave a thumbs-up to the results—the stock price surged 14.3% during the month. Commercial Bank of Qatar posted its second record profit in three quarters after generating higher income from fees, commissions and investments. Net income surged 64% to QAR436.4 Mn in Q1 2008 from QAR266.4 Mn in Q1 2007. This positive development pushed up the stock by 10.8% in April. Oman The Omani market (MSM30) bounced back with robust gains of 11.0% in April after it registered a loss of 2.5% in March. On a YTD basis, the Omani market was the strongest with returns of 24.1%. Liquidity increased sharply as volume traded increased from 397 Mn in March to 558 Mn in April. Oman Telecommunications Co. (OTEL)’s Q1 2008 profit surged 60% to a record level after costs fell and revenues rose. Net income in the first quarter 2008 increased to RO38.4 Mn from RO24 Mn in Q1 2007. The OTEL stock registered a healthy monthly gain of 13.1% in April. OTEL also plans to spend RO10 Mn on expanding its broadband network to meet the rising demand. Bank Dhofar (BKDB) posted a MoM gain of 15.9% in April on account of robust profits in Q1 2008. The bank’s net income rose 54% to RO6.2 Mn as it generated more income from lending and non-lending activities. Bahrain The Bahraini market recorded a gain of 1.9% in April as against a loss of 3.2% in March. Liquidity, in terms of volume and value traded, declined, on a MoM basis. The concentration of top five companies (in terms of volume) decreased from 87% in March to 77% in April. The strong performance of Gulf Finance House (GFH)’s Tunisia project helped the Bahrain-based investment bank to record a net profit of USD116 Mn in Q1 2008, up 61% y-o-y. GFH posted a MoM return of 12.0% and an YTD return of 34.7% in April. Heavyweight Arab Banking Corp (ABC)’s stock was the second-biggest gainer in Bahrain as it surged 14.8% during the month. The company recorded a 98.5% growth in net profit to USD6.8 Mn in Q1 2008. ABC’s total income increased to USD8.34 Mn from USD4.62 Mn in the corresponding period last year. Bahrain Telecommunication Co. (BATELCO)’s stock ended flat for the month as its Q1 2008 net profit grew 10.8% to BD27.4 Mn. ### About Kuwait Financial Centre “Markaz” Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over USD 5.09 billion as of March 31, 2008, 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; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd.
GCC markets post solid gains in April 08