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.
May 2014 was by and large a good month for equity markets in the MENA region, as almost all indices ended the month on a positive note, albeit with varying magnitudes. While Qatar index posted a new high, Dubai, Kuwait and Egypt indices were sedate rising at 0.6, 0.3 and 0.2 per cent, respectively. Trading in Kuwait was affected primarily due to late disclosure of financial results, leading to increased purchase of cheaper shares. Dubai market fell to its lowest close in May, since September 2013, as the index underwent a spate of corrections after climbing to over 50 per cent in 2014.
MENA Markets Trends - May2014
Source: Reuters, Zawya, Markaz Research
S&P GCC recorded growth of close to 3 per cent in the month of May, as inclusion of Qatar and UAE in the MSCI Emerging Market Index provided the impetus. Global Markets ended the month on a positive note with the MSCI EM Index gaining 6.3 per cent owing largely to the upswing in the Indian Markets (8 per cent), as a result of the optimism over election results.
The Qatar market will now represent 0.5 per cent of the MSCI Emerging Market Index, which has an AUM of around USD 1.4trillion. Inclusion of Qatar in the MSCI Index sent investors into a buying frenzy, as the Qatari index set a new all-time high on the last trading day of May.
Qatar Index – June 2013 to May 2014
Since the announcement of the inclusion was made in June 2013, the index has witnessed significant growth in volume and value traded. In a major positive development, Qatar Exchange increased the foreign ownership limit to 49 per cent from 25 per cent, which is estimated to increase the breadth and depth of the market in the coming years, as more foreign institutional investors (FIIs) enter the market. FIIs had invested close to USD 700mn in the Qatar market, in 2013. The Ten Qatari Companies added to the MSCI Emerging Market Index are Masraf Al Rayan, Barwa Real Estate, Commercial Bank of Qatar, Doha Bank, Ooredoo, Qatar Electricity & Water, Qatar Industries, Qatar Islamic Bank, Qatar National Bank and Vodafone Qatar.
In the month of May, the Qatari index went up 8 per cent to close at 13,694 points. While turnover went up by 2 per cent, trading volume declined 22.6 per cent. Banks and financial services accounted for over a third of the turnover, while industries, real estate and telecom made up another 50 per cent. May trading volumes in real estate and BFSI were 28 and 26 per cent, respectively, while telecom accounted for 21 per cent.
The top gainers in May were Masraf Al Rayan (36 per cent), Qatar Islamic Bank (28 per cent), Vodafone Qatar (23 per cent), Barwa Real Estate (15 per cent), and Qatar Electricity and Water (10 per cent), while the top losers in May were Ezdan Holding Group (-26 per cent) and Qatar Fuel (-15 per cent). Masraf has the highest weight in the MSCI EM Index among Qatari stocks.
IPO: International Agricultural Products (Egypt), Abdul Mohsen Al Hokair Group (Saudi Arabia) and Al Suwadi Power Company (Oman) are the new IPOs that are currently undergoing subscription. International Agricultural Products plans to raise close to EGP 27mn, and has offered 10.7mn shares at EGP 2.5 each, representing a 14 per cent stake in the company. Abdul Mohsen Al Hokair Group has offered 16.5mn shares, representing a 30 per cent stake. Al Suwadi Power Company has offered over 250mn shares, representing a stake of 35 per cent.