Capital Markets

Neutral outlook for GCC stock markets

According to Kuwait Financial Centre “Markaz” report on GCC stock & debt market outlook 2017, Boursa Kuwait has started this year on an explosive note. The much followed price index gained 16% while the weighted index gained by 11% as compared to 1.4% for MSCI GCC index and a negative 2.7% for Saudi Arabia. This has been among one of the sharpest rallies for Kuwait main index in recent years as the index posted positive gains for the fourteenth consecutive...

MENA Markets end 2016 on a positive note

According to Marmore’s recently released Monthly Market Review, MENA bourses had a positive month in December, with all markets ending the year in green. Morocco’s Casablanca Index led the charge rising 9.1 per cent, followed by Egypt’s HRMS index (7.2 per cent). Kuwait weighted and price indices had a positive month, with both climbing 3.5 per cent, amid a spurt in speculative trading ahead of the year-end. The Egyptian Index also registered the highest gains in the year, closing nearly...

Alternative Financing to Gain Prominence in GCC

However, the current low oil price environment has transformed the financing landscape in the region as traditional methods of financing such as bank loans are being fast replaced with alternatives such as bonds, private equity, crowdsourcing and IOU’s. The report added that budgetary deficits have forced the government to fix their deficits through debt issuance in both the domestic and international markets. The sudden spurt in debt issuance by the government and its related entities might be overwhelming for the...

GCC Markets Mixed, OPEC Deal Uncertain

Selling pressure created by Foreign Institutional Investors (FIIs) led to the fall in the Muscat index, while sharp fall seen in the Dubai index was attributed to profit booking, due to volatility in the international commodities and currency market. In terms of valuation, P/E of Morocco (18x), Qatar (14.3x) and Jordan (14.2x) markets were the premium markets in the MENA region, while the markets of Egypt (8.5x), Dubai (8.8x), and Oman (9.3x) were the discount markets. Blue Chips also had...

GCC Markets Fall Despite Oil Price Rise

Although the oil price rose by over 4 per cent, on the back of the OPEC agreement to limit crude output, Saudi index fell considerably after the Saudi government announced that it was reducing salaries and allowances for public sector employees. Many investors believe that additional austerity steps, such as new fees or taxes on the kingdom's large workforce of foreigners, could also be approved soon. Middle East fund managers have turned negative towards Saudi Arabian equities for the next...

Sources of Stock Market Wealth Creation: 3 Distinct Case Studies

Cash flows, ownership structure and free float shares of the company combined affect the dividend policies of the company. Industries Qatar for instance is majority owned by the government of Qatar. Traditionally regional governments’ have held majority stake in companies that deal in natural resources in the region. Industries Qatar is a good example of the role that government ownership plays in dividend policies. The government of Qatar owns close to 67% of the company and thus enjoys higher say...

Oil Price Rebound Fails to Cheer GCC Markets

Blue Chips were mixed in August with DP World and Ooredoo gaining 8.8 percent and 8.1 percent respectively. Four of the top five gainers were from Qatar, with Qatar National Bank and Industries Qatar share prices up by 7.5 percent and 6.1 percent respectively. Investors flooded their investments into Qatari large caps after the announcement of FTSE to include them into the emerging markets index on 24th August 2016. Saudi stocks were at the bottom, National commercial bank (NCB) and...

MENA Markets Mixed, Oil Flat Post – Brexit

S&P GCC rose marginally by 1.1% in June, to close at 91 points. Global investor reaction to the Brexit outcome had unnerved GCC investors, and speculation over a possible contagion in Europe had led to panic driven trading in the last two weeks of June. Investors have become more risk averse as uncertainty continues to plague global markets. In terms of valuation, P/E of Morocco (16.8x), Jordan (14.2x) and Kuwait (13.5x) markets were the premium markets in the MENA region,...

What are the GCC region’s high margin industries?

Corporate profits and net margins at an aggregate level have been on a clear downward trend but the aggregate profit margin conceals diverging performances between the different sectors. Profit margins in sectors such as basic materials, industrials, energy, utilities and telecommunication services have been affected by various factors. Subdued activity in the infrastructure space, softening real estate activity and a prolonged working capital cycle have eroded margins for contractors and construction material providers. For firms operating in the energy and...

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...