Capital Market

Fund houses revise their long-term capital market expectations – What has changed?

The unprecedented turn of events in recent times has drastically changed the outlook of the global economy in the near term. The economic disruption caused by COVID-19 has triggered global central banks and governments to act, changing the whole landscape for financial and real assets both in the short and long term. Things look much different now as compared to the end of 2019. Several asset classes witnessed a sharp sell-off and a subsequent recovery in recent months. Everything from...

GCC Corporate Earnings fall by 8% in First half of 2016. Expected to fall by 4% in 2016

Total earnings in 1H16 came in at USD 32.8 billion, partly supported by telecom and financial services sector. Among sectors, telecommunications and financial services posted positive earnings growth, as contribution from international markets and favorable exchange movements supported their bottom line. Earnings in banking sector remained flat while earnings in commodities, real estate and construction related sectors contracted as the fall in oil prices is increasingly felt across non-oil sectors. Blue chips fared relatively better, while earnings of mid-cap and...

Flat July for GCC Markets

Blue chips drove Qatar’s index surge, with real estate (8.52%), telecoms (7.94%) and banking stocks (7.1%) performing well in July. The recently announced Qatar’s fuel subsidy reform will also help shrink its budget deficit by reducing expenditures; a move that will help investments in private sector. Saudi index fell due to fall in oil price, and the continued resilience of shale oil, as increasingly efficient US shale production continues to drive a wedge in OPEC’s strategy of flooding the market...

Bankers can finally look forward to merger activity

The article originally appeared in The National | Business The fee-based investment banking business has four key components – syndicated loans, equity capital markets, debt capital markets and mergers and acquisitions (M&A). While in other markets we can witness activity across these four components, in the GCC investment banking advisers depend on syndicated loans for their survival – 50 per cent of total investment banking fees on average. Equities is dull thanks to poor performing capital markets and the related dull...

Revealed: The 30 most valuable non-banking companies in GCC

ROE is one of the important parameters that is used to evaluate the strength of the company as well as the return the company generates for the equity holders. ROE is also a measure of efficiency of functioning of the company. Debt to equity (D/E) indicates the leverage and thereby the risk the company faces due to its capital structure. As D/E ratio is a comparative measure, we have ranked the companies based on the measure to indicate companies that...

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,...

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...

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...

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...

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...