Capital Markets

Oil price recovery contributes to the regional markets’ rally in July

Value traded in July reflected the positive sentiments in the market, with volume traded increasing by 8% while the turnover in the market increased by 10%. All MENA markets, barring Abu Dhabi, Qatar and Egypt, witnessed gain in liquidity. Kuwait and Bahrain bourses evidenced 89% and 52% increase in value traded. The increase in liquidity attributed to the base-effect, especially due to poor trading activity in the previous month of Ramadan. In terms of valuation, P/E of Morocco (20.1x), Saudi...

Home bias among GCC Funds – Preference for Domestic Stocks in Regional Funds

Institutional constraints such as barriers to invest across boundaries, limitations on repatriation of investment income, varying corporate governance standards, higher transaction costs and currency risk have been put forth as possible reasons. Interestingly, closer to home regional mutual funds in GCC markets suffer from home bias as well, despite the region being largely homogenous and frictional costs to invest across the region are largely non-existent. The primary goal of a fund manager is to maximize returns while minimizing risk. However,...

Dual-Class Share structure: Answer to family business listing

Dual Class Share (DCS) structure is a governance structure that provides certain shareholders with voting power or other related rights that is disproportionate to their shareholding. Typically, one share provides one vote; in case of dual class share structure, one class of shares offer one vote, while shares in another class could carry multiple voting rights or absolutely no voting rights. For example, Alphabet Inc. (parent company of Google) has different class of shares: class A ordinary shares that is...

Visualizing Saudi Arabia in MSCI EM – Some Questions

When is the inclusion likely to happen: 2018/2019/2020? What will be Saudi Arabia’s weight in the index? And How much fund flows can be expect post inclusion? When is the inclusion likely to happen: 2018/2019/2020? MSCI has lauded the progress in Saudi Arabian capital market ushering its entry into the emerging markets. The kingdom will be third in the GCC league after UAE and Qatar that were included in the index in 2014. Thanks to plethora of reforms implemented by...

GCC bond market story-Just beginning to unfold

While the GCC equity markets came into prominence in the early part of the millennium the bond market took a back seat, primarily due to the lack of urgency to raise funds, ample liquidity in the system at low cost and certain cultural taboos. Family run organisations which control the majority of the economy were reluctant to expose their books to outsiders and sovereigns never had a dearth of capital. The data collated by Marmore clearly indicates an uptrend in...

MENA markets tumble in line with oil

Value traded and volumes in March reflected a mixed market mood, with volume traded, dropping by 22% while the turnover in the market increased by 34.6%. All MENA markets, barring Saudi Arabia and Dubai, witnessed increase in turnover in March. Dubai and Abu Dhabi witnessed the maximum fall in liquidity with volume declining by 41% and 40% respectively. In terms of valuation, P/E of Morocco (19.18x), Kuwait (16.2x), and Qatar (15.06x) markets were at premium, 8while the markets of Dubai...

MENA Markets Mixed, Oil Retreats

The month witnessed the volume traded hitting the reds with a negative growth of 22%, in contrast with a hike of 34.6% in the market turnover, indicating a mixed market mood. All MENA markets witnessed an increased turnover in March, leaving behind Saudi Arabia and Dubai to battle a negative market environment. Dubai and Abu Dhabi hit the lows in liquidity, with volumes spiraling down by 41 and 40%, respectively. Drawing the limelight on valuation, the market witnessed the P/E...

GCC corporate earnings awaits a turnaround in 2017

Effect of lower oil prices and their impact on non-oil sectors was evident in the earnings performance of H2, 2016. Key sectors such as banking, telecom, real estate and construction all witnessed a fall in earnings. Banking and Telecom sector’s earnings declined by 7% and 29% during H2 2016 on a YoY basis. Poor performance of the former was due to tight credit and weak economic conditions, while the latter suffered from subdued performance of foreign subsidiaries, increased regulatory costs...

Flat MENA, Positive World

According to Marmore’s recently released Monthly Market Review, most MENA bourses rebounded from a positive start to 2017, to close the month of February in the red. Bahrain, Jordan and Qatar were the exceptions, with the respective indices closing the month at 3.5%, 2.2% and 1%. Egypt, Morocco and Saudi Arabia were the laggards in February, falling by 4.8%, 2.5% and 1.8%, respectively. Kuwaiti Price and Weighted indices also fell by 0.7% and 0.8%, respectively. Profit taking dragged stock markets...

Kuwait Price Index up by 19% in Jan 2017

According to Marmore’s recently released Monthly Market Review, MENA bourses had a positive start to the year 2017, with nearly all markets ending the first month in green. Kuwaiti Price and Weighted indices led the charge, rising by 18.9% and 12.4%, respectively, followed by Bahrain (6.8%). Saudi Arabia and Oman were the only markets to register a fall in January, falling by 1.5% and 0.1%, respectively. Various reasons are being touted for the 14-day consecutive rally in the Kuwait bourses,...