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What to expect in 2011 for GCC Markets-Markaz Report
Janiary 4, 2011--
After severely underperforming Emerging Market peers in 2009, GCC markets performed more on par with the same in 2010; the S&P GCC index has gained 11% YTD versus about 13% for MSCI EM (MSCI BRIC remains an underperformer with a gain of just 3%). A recent report released by Kuwait Financial Centre “Markaz”, “What to expect in 2011”, points out that there was no perceptible difference in the scale and magnitude of issues that haunted the market post financial crisis. Companies are still busy repairing their balance sheets and image, while governments are busy spending with nothing specific to write home about regarding regulatory reforms.
The report notes that while oil prices did not spring any negative surprise in 2010, it was not enough to propel the market. In the wake of mounting pressures in the form of weak earnings, ultra weak liquidity and ever present volatility, stable oil price alone is not sufficient to lift the markets to heights that investors are used to in the past.
One possible reason for the ultra poor liquidity is that retail investors (constituting the backbone) are still busy putting their house in order while sources of traditional funding for stock market (bank lending) has come to a complete halt. Earnings destruction in certain cyclical sectors like the investment sector has been too severe to stage a meaningful comeback. Even the elephant among the sectors i.e., banking, continued to surprise investors with high levels of provisioning. Given firmer oil prices and a better global economic environment, the GCC is set to show stronger growth going forward despite slower private investment/credit growth continuing to be a drag on economic growth. Private demand is expected to remain weak in the intermediate term until investor confidence returns more fully and bank balance sheets return to a healthier state.
Overall, the authors remain optimistic in the New Year with positive outlooks for Kuwait, Abu Dhabi, Qatar and Oman while neutral for others. There are several interesting investment themes at play. We reiterate our strong belief that high volatility should be a source of portfolio strategy rather than a problem. We also provide some ideas in the space of defensives and cyclicals. We believe that GCC is a good yield play. Watching analysts’ coverage can provide some important clues to stock picking. Strategies that benefit in a low liquidity environment are also emphasized. Finally, it is time to remove the wheat from the chaff through the lenses of corporate governance.
Tadawul bourse rises to 6,699.96 points
January 4, 2011--The Saudi Stock Echange (SSE) added 0.35% to close at 6,699.96. The world's largest petrochemical firm SABIC gained 1.40% to end at SR108.50. Alujan Corp. hit the top of the charts on Tuesday, surging 6.07% to finish at SR23.60.
Alujain invests in major industrial projects in the petrochemicals, mining, metals and energy sectors in KSA. The transport sector lost slightly, with The National Shipping Co. of Saudi Arabia posting the largest loss in the segment, closing two percent lower at SR17.10. 66 shares added value, 54 declined and 25 ended flat in Riyadh.
Qatar Exchange extends 2010-rally
January 4, 2011--There is no let-up in buying at the QE market in Doha, despite a gain of 24.75% in 2010. On Tuesday, the QE Index added 1.13%, reaching 8,972.94.
Shares of Doha Bank surged 2.47% to end at QR66.50. The next board meeting of the quite expansive Qatari bank is scheduled to take place on January 18. Al Khalij Commercial Bank did not join the bull's run today and weakened by 0.59% to close at QR16.90.
Kuwaiti banking shares post strong gains
January 4, 2011--The KSE Market Index gained 0.38% (closing at 6,974.1) as National Bank of Kuwait (up 1.38% at KD1.460) and Kuwait Finance House (1.66% higher at KD1.220) lifted the market sentiment.
The banking sector index surged 2.23%. Real Estate Trade Centers, also known as Marakez, was the main loser, finishing off 8.6% at KD0.530.
Lack of catalysts drag Abu Dhabi bourse down slightly
January 4, 2010--The ADX General Index closed 0.17% lower at 2,748.19. RAK Bank was the main losing share, finishing 5.63% down at Dhs4.70. Pharmaceutical producer Julphar ended 3.74% lower at Dhs1.80.
Leasing specialist Waha Capital gained 1.30% to close at Dhs0.77. Earlier in the day, Waha Capital announced that Abu Dhabi Islamic Bank arranged a $32m structured Ijara financing for Waha's subsidiary Waha Maritime to fund the acquisition of six offshore supply vessels. ADIB shares added 1.30% to finish at Dhs3.00.
Dubai market rises, then declines 0.23%
January 4, 2010--The DFM General Index opened positively but eventually declined to 1,659.39 points (off 023%). Bank Emirates NBD bucked the trend, rebounding by 4.4.29% to reach Dhs2.92.
Emaar Properties declined (1.12% lower at Dhs3.54) as well as Arabtec (down 0.49% at Dhs2.03). Trading values and volumes declined by 2%, as some 118.4m shares worth Dhs165.7m were traded.
SABB HSBC Saudi PMI signals strong non-oil private sector growth
January 3, 2011--The Saudi British Bank "SABB" has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers' Index (PMI) for December 2010 - a monthly report issued by the bank and HSBC. It reflects the economic performance of Saudi Arabian non-oil producing private sector companies and establishments through the monitoring of a number of variables, including output, new orders, exports, input prices, output prices, quantity of purchases, stocks and employment.
At 61.3 in December, the headline index was down slightly from November's series record high of 62.2. Nevertheless, the latest reading signalled another considerable gain in the health of the Saudi Arabian non-oil private sector. Moreover, the rate of the improvement remained above the series trend.
Activity levels continued to grow in the final month of the year. Although the rate of increase moderated slightly from November's peak, it was nonetheless sharp. Anecdotal evidence showed that output was raised to accommodate another inflow of new business.
New order receipts increased at a substantial rate during December as market conditions improved. A combination of promotional work, good business reputations and company expansions also helped stimulate demand. Although export growth picked up sharply on the month, data suggested that the domestic market remained the principal driver of total new order expansion.
The Saudi Arabian Tadawul market gained 0.31% to reach 6,676.66. Market bellwether and petrochemical giant SABIC added 1.42% to reach SR107.00.
January 3, 2011--The Saudi Arabian Tadawul market gained 0.31% to reach 6,676.66. Market bellwether and petrochemical giant SABIC added 1.42% to reach SR107.00.
Mohammad Al Mojil Group Company, a licensed general contractor specializing in onshore and offshore oil & gas and petrochemical projects, was the main gainer today, finishing 4.74% higher at SR19.90. Oil prices gained 12% in 2010. Earlier in the day, Swiss bank Sarasin's analyst and commodity strategist Eliane Tanner said in her 2011 outlook that "We do not think that major oil price spikes are likely in 2011 in this context because the oil market should continue to be well supplied this year as well. Spare capacity is still at a relatively high level and OECD inventories are well filled. Since we also expect global economic growth to weaken slightly in 2011, growth in demand should be slightly more moderate than in 2010." Shares of Tihama Advertising & Public Relations Co. declined 1.92% to end as the top loser at SR25.50.
Buyers are back at Qatar market
January 3, 2011--The QE Index in Doha climbed 1.50% higher to reach 8,872.53 points.
The gulf state's largest lender Qatar National Bank surged 3.21% to reach Qr193.00. Industries Qatar added 2.57%, closing at QR143.60. Al Meera Consumer Goods Company failed to attract sufficient demand, ending 0.97% lower at QR61.50.
Strong banks fail to lift Kuwait market
January 3, 2011--The KSE Market Index ended down 0.11% on Monday, closing at 6,947.6 points. Kuwait Finance House (KFH), the largest Islamic bank in the country, surged 3.44% to reach KD1.200.
Burgan Bank added 1.88%, finishing at KD0.540. The KSE Bank index gained 1.08%, but weak performing insurers (off 0.88%) and industrials (0.54% lower) weighed on the market sentiment.
