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After gaining by 3% in July, the GCC markets continued their positive streak with a return of 2.3% in August. The returns in August marks the sixth consecutive month of positive gains in the current year. Among the six GCC markets, Oman gained the highest with a return of 9% (MSCI indices) closely followed by Kuwait with a return of 8%.
Bahrain is the only market in the GCC which continues to lag behind in terms of YTD returns both in comparison to other GCC countries and also in comparison to other markets across the world. Bahrain’s YTD performance has been at -19%.
With the rise in August, the GCC markets which were available at a discount to emerging market peers till July are currently valued at more than the emerging market peers. It has to be noted that the emerging markets witnessed a flat month in August with a return of -0.14%. The current trailing 12 month PE for GCC as a whole is at 18.59x as compared to emerging market PE at 16.17x.
The discount rates from central bank stayed constant in August as compared to July. For Kuwait, the central bank discount rate was at 3%, which is a decline from a high of 6.25% in Dec-07 and the repurchase rate was at 1.75, which is a decline from a high of 5.87% in Mar 2007.
The value traded in the stock markets continue to be low with the month of August posting a total value traded of USD 37 Bn, which is a 6% decline on a MoM basis and a 22% decline on a YoY basis.
GCC Markets Review
Global Markets review
The gains in July have continued well into August. The MSCI World which returned 9% in July gained another 3% in August taking its YTD returns to 24%. However, the robust bull run in China got terminated in August. Till July, the Chinese Shanghai A share index was up by 87% from the beginning of the year with a consecutive MoM rise from the beginning of the year. In August, the Chinese A share index declined by 21% puling down the YTD returns to 46%. Also, the month of August for the first time in the current year showed a developed market out performance over emerging markets. Among the commodities, Oil posted its first monthly negative return in August at -2% after posting consecutive positive returns from the beginning of the year.
YTD Market Cap Weighted returns of MSCI World Constituents
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About Markaz
Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD900 million as of June 30, 2009, 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.