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June 9, 2016
Potential Impact of Capital Market Reforms in Saudi Arabia
The Tadawul All Share Index plans to increase the listings to 250 companies from about 170 now, over the next seven years. Its current market capitalization of $396 billion is expected to add close to $ 120-130 bn post the IPO of Aramco and possible inclusion into the MSCI emerging market index by Mid-2017. The aim of the government is to increase the size of Saudi Arabia’s stock market to match that of its GDP within seven years (2014 -$798...
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June 7, 2016
MENA Markets Break its Correlation to Oil
S&P GCC also declined by 5.1% in May, to close at 90 points. Worries over contraction in the construction industry and possibility of rise in provisions and non-performing loans in regional banks made investors wary of taking long-term positions in banking and construction shares, despite positive Q1 results for the former. MENA markets liquidity had a negative month, with volumes decreasing by 32% and value traded falling by 7%. Morocco and Bahrain witnessed increases in both volume and value traded,...
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May 15, 2016
Managing the Big Float – Saudi Aramco
The market capitalization of the Saudi Arabian stock market is currently around USD 400bn and the IPO of Aramco could add further USD 100bn to the market capitalization (Financial Times). Inclusion of Saudi Aramco in energy sector would increase its weightage from the current value of 21.1% to 36.8% in the Tadawul index pushing the dominant financial services sector from the top spot. We believe the revised weightage where petrochemicals/energy sector dominates the index rather than the financial sector is...
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May 5, 2016
Brent’s record rise sustains MENA momentum
Gulf markets have been gaining for the past couple of months, on the back of strong oil market performance, with the belief that the oil price movements have turned a corner. Investor focus has now shifted to the corporate earnings that are affected by the austerity measures, which were undertaken due to low oil prices. The TASI index performance was largely due to companies beating their first-quarter earnings estimates, as well as the surge in oil prices. The combined net...
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April 18, 2016
These stocks in UAE and Saudi Arabia still trade above 5-year PE despite market fall
According to an analysis by Marmore MENA Intelligence (www.marmoremena.com), a research house specialized in MENA economies and business issues with the focus on providing actionable solutions, out of a total of 121 UAE-listed stocks (comprising of ADX’s 65, Nasdaq Dubai&rsquo's 5 and DFM’s 52), 12 stocks are trading at multiples that are higher than their 5-year average PE multiples, which includes stocks such as Etisalat, du, Aramex, Commercial Bank of Dubai and RAK ceramics, among others. Likewise, out of 173...
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April 6, 2016
GCC stock markets: Where is the research?
Compared to most developed and emerging markets, the Gulf Cooperation Council’s stock markets suffer from poor research coverage. The four largest GCC equity markets together enjoy less than a third of the research coverage of other regions, with that available often restricted to large stocks, leaving mid-cap and small-cap stocks mostly ignored from the spectrum. In the GCC, the major producers of research are a handful of domestic banks and investment houses, which have research as an auxiliary...
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April 5, 2016
MENA Markets March on Oil Rise
Egypt’s stocks rose in March, as the country’s central bank devalued its currency and stated that it would adopt a more flexible exchange-rate policy, to ease an acute dollar shortage that is hurting the economy. The devaluation, along with other measures, made stocks cheaper for both domestic and foreign investors, who went on a purchasing binge. The exchange closed the month at 687 points, up from 560 points in February, in what has been the single largest monthly gain in...
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January 21, 2016
Qatar Stock Market Outlook 2016
Price-to-earnings multiple for Qatar has fallen by 25% and currently stands at 11.1x. Qatar market is relatively undervalued when compared to the markets of Saudi Arabia and Kuwait. Investor interest in the market waned post 2014 owing to poor international conditions. Qatar also has the highest dividend yield in the region at 5.1%. We expect corporate earnings growth to be slightly negative in 2016. Earnings are expected to slightly reduce as infrastructure spending peaks. Real estate and commodities sector in...
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January 21, 2016
All-Time Highs – Kuwait 15 Index Stocks
Instead of analyzing the index we are going to analyze performance on a stock level and measure the divergence from the recorded all-time highs (ATH) of the respective stocks since fundamentally sound stocks (good top and bottom line growth, sound management etc.) consistently establish new ATH’s reflecting growth and opportunities. While stagnant companies may struggle to re-conquer their ATH’s and can thus test investor patience (Japan for e.g.). Looking at Kuwait 15 Index constituents, the only positive news comes from...
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January 20, 2016
UAE Stock Market Outlook 2016
Valuation: Positive Price-to-earnings multiple for UAE fell by 13% in 2015 and currently stands at 10.4x. The fall has been the most in Dubai index, wherein, the P/E multiple contracted by 25% from 12.4x at the start of year to a current value of 9.3x. UAE markets seem attractive for investors with P/E ratio of 10.4 while its comparable peers Kuwait and Saudi Arabia are slightly overvalued at 14.4 and 13 respectively. On P/B basis, UAE (1.3) is slightly overvalued...