Markets remain sluggish as investors book profits

The disconnect between world markets and the GCC was apparent during October ’17, as GCC markets declined, despite optimism in the oil market, and gains in emerging markets and advanced markets. The MSCI GCC index declined for the second consecutive month by 2.8 percent, while oil prices surged 6 percent touching $60/b for the first time since 2015 on hopes of market rebalancing. The decline in the GCC markets also came as economic growth remains muted as highlighted by the IMF which further slashed real GDP growth rates for 2017 and 2018 to 0.5 percent and 2.2 percent, respectively.

Saudi Arabia and Kuwait witnessed the biggest monthly declines of 4.8 percent and 2.5 percent respectively, after investors booked profits on blue chip stocks accumulated in anticipation of the FTSE announcement last month. The decline in TASI also came on the back of the Kingdom’s inclusion being pushed until next year. The ongoing diplomatic rift with Qatar continues to affect the country’s benchmark that declined by 1.8 percent after the index reached the lowest point in six years.

On the other hand, the surge in the UAE markets came after two months of sluggish performance as investors accumulated large-cap financial services names in Dubai and real estate names in Abu Dhabi. In addition, resilient banking earnings for 9M-’17 for UAE-based banks as well as for most of the other banks in the GCC also supported investor sentiment during the month.

Trading activity during the month recovered in almost all the markets except for Qatar, continuing from last months recovery. Monthly value traded reached a seven-month high level of $24.4bn after trading activity in Dubai increased by more than 1.5 times month-on-month to reach $2.71bn. Saudi Arabia also saw higher trading activity that increased by a third to reach $17.8bn. Boursa Kuwait After almost three months of positive performance, Kuwaiti indices declined during October ’17 as investor booked profits post the decision by FTSE that included Kuwait in its secondary emerging markets index. Both the Weighted Index and the Price index declined by 2.5 percent primarily as investors shorted large-cap stocks. This was also reflected in the relatively higher decline of 3 percent for the Kuwait-’15 Index. Nevertheless, Kuwait continues to top GCC markets in terms of YTD-’17 performance with a return of 10.5 percent for the weighted index and 13.3 percent for the Price index.

Trading activity on the exchange surged during the month, as seen in other GCC markets, reaching the highest level in six months. Monthly volume traded surged 19 percent to 2.5bn shares from 2.1bn shares during September ’17. Monthly value traded also surged but at a much lower pace of 9 percent to reach KD 466mn as compared to KD 426mn during the previous month. The increase in trading activity can also be associated with the higher number of trading days during October ’17 as compared to the previous month. Zain remained the top stock traded in terms of volume and value at 215.1mn shares worth KD 112.5mn traded during the month. National Industries came in second on the volume chart with a volume of 132.2mn shares followed by Investors Holding Group and Alimtiaz Investment with volumes of 122.8mn and 120mn, respectively. On the monthly value chart, NBK came in second with 44.6mn worth of shares traded during the month followed by KFH and Gulf Bank with KD 44.1mn and KD 29.2mn in monthly value traded, respectively.

Prominent monthly gainers included Jazeera Airways which surged 9.9 percent despite reporting a 20.5 percent decline in its 9M-’17 profits. The surge in the company’s shares came after it announced the addition of three additional routes in India. Other gainers included Gulf Bank and IFAHR with gains of 7.1 percent and 6.8 percent, respectively. Shares of Gulf Bank got a boost after the company reported 10.2 percent increase in 9M-’17 net profits. On the decliners side, Warba Insurance topped the chart with a decline of 28.9 percent followed by Al Argan International Real Estate and Investors Holding Group with declines of 26.7 percent and 25.2 percent, respectively. The monthly market breadth was skewed towards decliners with 106 companies as compared to 39 gainers. In terms of sector performance, the Consumer Services index topped with a monthly gain of 2.7 percent primarily on the back of gains recorded by Jazeera Airways and IFAHR. On the decliners side, the Consumer Goods index witnessed the steepest fall of 9.2 percent primarily on the back of an 11.6 percent decline in shares of Americana.

On the economic front, Fitch Ratings affirmed Kuwait’s rating at AA with a Stable outlook highlighting the country’s exceptionally strong fiscal and external metrics with one of the lowest fiscal break-even oil price. On the downside, the agency highlighted the country’s over dependence on oil, geopolitical risk and a poor business environment. Saudi Arabia (Tadawul) Saudi Arabia’s benchmark TASI index witnessed one of the biggest monthly declines in more than a year during October ’17 that pushed YTD’17 gains into the red. The benchmark declined by 4.8 percent during the month as all of the sectoral indices declined with the only exception of the Utilities index, pushing YTD-’17 returns to –3.8 percent. The decline also comes despite a largely positive 9M-’17 earnings season with reported 9M-’17 profits up by 5.4 percent and banks contributing a profit growth of 2.4 percent. The index started receding since the start of the month after the FTSE decision, recovered during the second week but lost momentum during mid month. In terms of sector performance, the REITS index had the biggest decline of 13.2 percent due to double digit declines for all the six listed REITSs on the exchange on profit booking as the index had a strong run up since the listing of REITs this year. The Media index witnessed the second-biggest decline of 10.9 percent as both the stocks in the index declined during the month.

Trading activity on the exchange reached a 7-month high level during October ’17. Volume traded during the month increased by more than 50 percent to reach 3.1bn shares as compared to 2.0bn shares in the previous month. Monthly value traded also surged by a third to reach SAR 66.6bn as compared to SAR 49.9bn during September ’17. Alinma Bank continued to top both the monthly volume (686.6mn) and value charts (SAR 12.1bn) for the second consecutive month although shares of the bank remained flat despite 30.5 percent improvement in 9M-’17 profits for the bank. SABIC recorded the second highest value during the month with shares worth SAR 9.2bn changing hands during the month followed by Al Rajhi Bank and Dar Al Arkan Real Estate Dev with SAR 8.3bn and SAR 3.2bn in traded value. Abu Dhabi Securities Exchange The ADX index was the second best performing market in the GCC, as the index moved up by 1.9 percent during the month of October ’17. The index closed at 4479.60 points, but remained in the red on a YTD basis. Sectoral performance was mixed, and consisted of both gainers and decliners. Telecoms were the best performing index as it went up by 3.2 percent m-o-m, as Etisalat (+3.2 percent) was the main driver for the monthly gains. Real Estate index gained by 2.2 percent m-om in October ’17, as Aldar Properties went up by 2.2 percent, while Eshraq Properties and Ras Al Khaimah Properties gained by 2.6 percent and 2.9 percent respectively. The Services index also gained by 2.2 percent for the month, and Abu Dhabi National Hotels was the top performing stock, moving up by 9.7 percent. Banks moved up by 1.7 percent for the month of October ’17, as large cap First Abu Dhabi Bank gained by 1.5 percent m-o-m, while ADCB moved up by a higher 4.1 percent for the month. Consumer Staples was the worst performing index, as it went down by 2.7 percent m-o-m, as Ras Al Khaimah Poultry & Feeding Co and FOODCO Holding plunged by 10.8 percent and 9.9 percent respectively.

Market breadth was broadly even as 25 stocks declined during the month, while 25 names gained ground. Trading trends were mixed in October ’17, as traded volumes declined m-o-m by 15.9 percent while value traded improved by 7.9 percent respectively m-o-m. Total volumes improved to 1.98bn shares (September ’17: 2.35bn) while value traded during October ’17 improved to AED 4.4bn (September ’17: AED 4.1bn). Green Crescent led the gainers list and achieved a monthly return of 44 percent, followed by Finance House and United Arab Bank, which went up by 19.3 percent each. Prominent decliners included Al Khaleej Investment with a monthly share price decline of 15.9 percent, followed by National Marine Dredging Co and Gulf Pharma Co, as they saw their stock prices erode by 12.9 percent & 12.2 percent respectively. Dubai Financial Market DFM was the best performing index in the GCC for the month of October ’17 and witnessed improving trends, and remained in the green on a YTD basis. The index went up by 2.0 percent m-o-m and closed at 3635.87 points. Sectoral indices were mostly positive for the month barring the Consumer Staples index, which went down by 2.5 percent m-o-m, driven by DXB Entertainment, which went down by 2.6 percent m-o-m. The Financial and Investment Services index was the best performing sectoral index and went up by 10.5 percent m-o-m, as Dubai Investment Co jumped by 13.4 percent m-o-m, followed by Dubai Financial Market, which saw its stock move up by 4.5 percent for the month of October ’17. The Transportation & Insurance indices followed with m-om gains of 6.1 percent and 5.4 percent respectively, while Banks remained stable (+0.7 percent) for the month. Banks failed to participate in the gains for month as large cap names such as Emirates NBD and Emirates Islamic Bank lost ground as the latter fell by 11.7 percent for the month while Emirates NBD declined marginally by 0.4 percent m-o-m.

In corporate developments, the $1.5bn IPO of Emaar Properties UAE development business received bids for the entire amount within the first day of the issue opening. The company is offering 800mn shares at AED 5.7-6.9 per share. In earnings related releases, Emirates NBD reported 9M’17 net profit of AED 6.17bn, which was up 15 percent as compared to 9M’16. Net interest income increased 4 percent y-o-y due to loan growth and was aided by a sustained improvement in margins. Transportation and logistics player Aramex reported Q3-’17 net profit of AED 81.6mn which represents an increase of 13 percent y-oy, while revenues for the quarter also increased by 9 percent y-o-y to AED 1,144mn.

Qatar Exchange

The QE 20 index yet again witnessed a month of decline, and remains the worst performing market in the region YTD, declining seven out of the ten months of 2017. All indices closed in the red for the month. The QE 20 index dropped by 1.8 percent m-o-m, and closed at 8165.06 points. The Qatar All Share index, which maps the broader index, also witnessed a higher decline, as it went down by 3.5 percent m-o-m for the month of October ’17. Market breadth was poor as 35 companies declined, while 8 companies advanced during the month. The Insurance index was the main laggard, as the index plunged by 10.9 percent m-o-m, as Qatar Insurance Company dropped by 14.9 percent m-o-m, while Al Khaleej Takaful Group and Qatar Islamic Insurance declined by 22.0 percent and 10.3 percent respectively. The Real Estate index followed, with declines of 9.0 percent m-o-m, as all stocks receded in the index with Ezdan Holding Group and Barwa Real Estate dropping by 9.5 percent and 6.4 percent m-o-m respectively. Banks and Financial Services saw lower declines, and receded by 1.6 percent on the index, as QNB remained mostly stable dropping by only 0.4 percent mo-m, while Qatar Islamic Bank gained ground and went up by 6.5 percent mo-m for the month of October ’17.

Trading activity on the index was lower, as value traded during October ’17 decreased by 9.5 percent to reach QAR 3.6bn, while traded volumes declined by 13.2 percent m-o-m to reach 167mn shares. In terms of trading activity, Qatar National Bank topped the monthly value traded chart with QAR 703mn worth of shares traded, followed by Qatar First Bank and Masraf Al Rayan recording QAR 291mn and QAR 209mn in monthly value traded. In terms of volumes traded Qatar First Bank led all stocks with traded volumes of 34mn shares. Investment Holding Group and Vodafone Qatar followed with traded volumes of 21mn shares and 20mn shares respectively. Qatar Islamic Bank was the top performing stock in the index for the month as its share price surged by 6.5 percent. Al Ahli Bank of Qatar followed along with Qatar General Insurance & Reins Co, as their stock prices moved up by 5.1 percent and 4.8 percent respectively. On the other hand, shares of Islamic Holding Group led the monthly losers chart with its stock losing 26.6 percent m-o-m. Al Khaleej Takaful and Investment Holding Group followed with declines of 22.0 percent and 21.4 percent respectively for the month.

Bahrain Bourse

The Bahrain All Share Index, which remains one of the best performing markets YTD, remained broadly range bound in October ’17. The index closed 0.5 percent lower on a m-o-m basis during the current month. The index closed at 1276.69 points at the end of the month. Sectoral performance was mostly down, as all indices barring the Industrials index declined during the month. Market breadth for the index showed weakness as well, as 8 stocks gained ground, while 12 stocks witnessed declines in their share prices. The entire financials pack of Banks, Investment and Insurance companies were down. Banks went down by 1.9 percent m-o-m in October ’17, as bellwether AUB dragged the index down with a drop of 3.5 percent mo-m, while National Bank of Bahrain went down by a higher 3.8 percent mo-m. Insurance companies were down marginally by 0.6 percent m-o-m in October ’17 as Arab Insurance Group declined by 2.0 percent m-o-m. The Investment sector receded by 1.3 percent m-o- m as GFH declined by 2.2 percent, and Al Baraka Banking went down by 5.0 percent for the month of October ’17. Large-cap in the Industrial sector, Aluminum Bahrain jumped by 11.4 percent m-o-m for the month of October ’17.

The exchange’s figures of value and volumes traded in October ’17 exhibited mixed trends on an m-o-m basis, as compared to the previous month. Volumes traded in the exchange reached 78.5mn and moved down by over 52 percent m-o-m as compared to 164mn shares in September ’17. Value traded improved by over 41.8 percent in the exchange to reach BHD 13.1mn in October ’17, as compared to BHD 13.1mn in September ’17. Furthermore, the number of trades made in the exchange increased to 2,146 trades, a 44.6 percent m-o-m jump from September ’17. Gulf Finance House was the most actively traded stock in October ’17 with BHD 5.4mn worth of its shares traded on the exchange. Aluminum Bahrain and Ahli United Bank followed with BHD 4.1mn and BHD 4.0mn worth of shares traded. Aluminum Bahrain topped the gainers list for the month of October ’17, as it witnessed a double-digit m-o-m increase, followed by Nass Corporation and Bank of Bahrain and Kuwait with monthly gains of 9.8 percent and 4.0 percent respectively as compared to September ’17. Inovest was the main laggard for the month of October ’17, as it witnessed a m-o-m decline of 16.3 percent, followed by Seef Properties and Al Khaleeji Commercial Bank with monthly declines of 14.5 percent and 5.4 percent respectively as compared to September ’17.

Muscat Securities Market

After recording the best monthly performance during September, Oman’s benchmark MSM 30 index declined by 2.5 percent during October ’17 after all the three sectoral indices witnessed declines during the month. The Financial index recorded the steepest decline of 4.9 percent followed by the Industrial and Services indices with declines of 4.2 percent and 0.2 percent, respectively. The decline during October ’17 further pushed YTD-’17 declines to 13.4 percent, second highest in the GCC. The decline in the Financial Index came on the back of a decline in all the shares in the sector with the only exception of Oman United Insurance that gained 4.1 percent during the month. Shares of NBO dropped 11.5 percent after the bank reported a profit decline of 18.1 percent for 9M-’17.

Trading activity remained upbeat during the month, rising for the third consecutive month primarily due to the higher number of trading days as compared to the previous month (23 days in October ’17 as compared to 17 days in September ’17). Total monthly volume of shares reached a seventeen-month high level of 314mn, up 16 percent from the previous month. However, the increase was primarily due to 163.4mn shares of Bank Sohar traded on Oct 5, 2017. On the other hand, monthly value of shares traded reached the highest level since March-’17 at OMR 68mn, recording a m-o-m increase of 26.7 percent.