Kuwait Financial Centre “Markaz” recently released its Monthly Markets Review report.
Markaz report stated that GCC stock market lost momentum amidst concerns of over valuations among blue-chip companies that nudged investors into profit booking. S&P GCC Index is down nearly 0.4% for the month, trimming down the return for the year to 8.7%. The negative returns can be attributed to Dubai, Oman and Qatar indices, which ended the month down by 3.3%, 2.6% and 2.5% respectively. Contrastingly, Boursa Kuwait main index and Bahrain index ended the month higher by 0.9% and 0.6% respectively. MSCI world index remained flat for the year while MSCI Emerging market index displayed a bearish trend, falling by 3.8% for the month.
Qatar Islamic Bank and Qatar National bank were the top gainers amongst the blue chips companies in GCC for the month, surging 7.3% and 5.1% respectively. The heavyweight Qatar National Bank also reached the highest price since January 2015. It is worth noting that QNB’s profits rose 7% in the first quarter of 2018 from USD 0.88 billion in Q1 2017. The share price of SABIC and Saudi telecom, the two largest companies in Saudi Arabia based on market cap rose 13.85% and 7.1% respectively driven by a growth in profits.
The Brent crude surged 3.2% for the month, extending YTD gains to 16%. The oil price was volatile during the month as they briefly touched $80 mark while trading initially close to $73 during the start of the month. Oil traded near a three and half year high during the month on concern about supply disruptions from Venezuela and Iran. Saudi Arabia and Russia hints the supply caps maybe scaled back in order to seize the opportunity of fairly high oil prices while simultaneously trying to avoid choking off demand by pushing oil prices too high.
U.S. kept the Fed rates unchanged, a decision that was arrived at unanimously. Following the stable rates, GCC countries kept domestic policy rate unchanged. U.S. is however likely to raise interest rates three more times during the remainder of the year with the next rate hike expected at the June meeting followed by hikes in September and December.
MENA Market trends
Markaz report said as the macroeconomic scenario improves with new regulations in place, change in consumer behaviour and demographics, Mergers & Acquisitions (M&A’s) could be a key source of value addition both at operational and strategic level. This is evident from the merger between Emirates NBD and Turkey's Denizbank. SABB and Alawwal also close in to complete the $5 billion deal that will create third largest bank in Saudi Arabia. The deal will mark the first major banking tie-up in the Kingdom in two decades since Saudi American Bank merged with United Saudi Bank in 1999. The merged entity will have assets of around $77 billion and is expected to strengthen the banking system in Saudi Arabia.
UAE cabinet approved 100 percent ownership of UAE-based businesses by foreign investors by year-end. Real-estate industry shares in particular may get a boost from full foreign ownership in companies as the government seeks to attract investment.
About Kuwait Financial Centre “Markaz”
Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the MENA Region with total assets under management of over KD 1.04 billion as of 31 March 2018 (USD 3.48 billion). Markaz was listed on the Boursa Kuwait in 1997.