Saudi defies global downtrend on FTSE upgrade, rest of GCC drops

Boursa Kuwait falls on bearish trend in large cap sectors

KUWAIT: Global equity markets declined during March-18 with all the key financial markets recording negative returns for the month. However, Saudi Arabia had the best monthly performance since June-17 with the TASI up 6.1 percent on investor enthusiasm surrounding the FTSE upgrade. As expected, the index compiler upgraded Saudi Arabia to the Emerging Market status, which is expected to attract $5.5 billion in passive index-linked funds, in addition to an even larger flow of capital from actively managed funds.

The surge in TASI pushed the monthly returns for the overall GCC index by almost 5 percent during March18, further raising Q1-18 gains to 8 percent, primarily on the back of 8.9 percent returns for TASI. On the other hand, the rest of the GCC markets declined in March-18, partly due to dividend declarations during the month further pressured by weaning fundamentals in consumer-specific sectors like consumer staples, consumer durables and services and insurance, especially in the UAE. The Real Estate sector was also one of the worst performers during the year with a decline of almost 10 percent.

Weak demand trends in UAE real estate markets pushed the DFMGI down by 4.2 percent during the month making it the worst performing market during the year with a decline of 7.8 percent. In Qatar, the raising of foreign ownership limits had minimal impact on the benchmark QE20 index that was down 1 percent during the month, although this was also due to dividend declarations, as seen from the 1.5 percent positive monthly return for the Qatar Exchange Total Return Index. Meanwhile, banks in the region have performed positively since the start of the year supported by resilient earnings and improving fundamentals on the economic front. This performance was reflected in the almost 20 percent or higher returns for some of the larger banks in the region, including First Abu Dhabi Bank, NCB, ENBD and Al-Rajhi.

Boursa Kuwait

KSE price index declined by 2.1 percent during March-18 following declining trends in key large cap sectors. The weakness was broad-based that was evident from the almost flat return for the Kuwait Weighted Index. That said, the large-cap Kuwait-15 index recorded a gain of 1.4 percent supported by surge in shares of Viva Kuwait (especially on the last day of the month and declined on the following day), Ahli Bank (+8.1 percent), NBK (+4.2 percent) and Humansoft (+5.8 percent). In terms of YTD-18 performance, all the three Kuwaiti indices continue to remain in the green.

The monthly sector performance chart was topped by the Consumer Goods index that surged 19.7 percent solely on the back of gain in shares of Americana that surged 36.7 percent during the month, topping the monthly gainers chart, while the other three stocks recorded negative returns

for the month. The Basic Materials index was the second-best performing index with a gain of 3.4 percent led primarily by 8.5 percent surge in shares of Boubyan Petrochemicals. The banking index was almost flat as the positive returns for NBK and ABK were offset by decline in shares of most of the other banking stocks. On the other hand, the decliners side was led by the Technology index with a decline of 12.2 percent, followed by Consumer Services and Oil & Gas indices with declines of 6.8 percent and 6.7 percent, respectively. The Real Estate index was also one of the decliners with a fall of 5.1 percent during the month. On the regulatory front, Boursa Kuwait underwent significant changes by the end of the month with the implantation of planned changes under the MD2 (Market Development Phase 2) including the changes to market segmentation, new circuit breakers and trade rules. The closing of the month also saw FTSE announcing a tentative list of 10 Kuwaiti stocks that will be included in its Emerging Market index in two phases in September-18 and December-18 with a projected weight 0.4 percent in the index.

Trading activity recovered during the month after witnessing a steep decline during February-18. The recovery was backed by higher trades in large-cap stocks resulting in 10 percent growth in monthly value traded that reached KD 227.3 million as compared to KD 207.3 million during the previous month. On the other hand, volumes traded continued to decline during the month, falling by 12 percent to 1.2 billion shares as compared to 1.3 billion shares in the previous month. NBK topped the monthly value traded chart recording trades worth KD 44.3 million, followed by KFH and Zain with KD 32.3 million and KD 20.1 million worth of shares changing hands during the month. The monthly gainers chart was topped by Americana with a return of 36.7 percent with minimal trades in the stock, followed by Jiyad Holding and Viva with returns of 25.3 percent and 19.0 percent, respectively. On the decliners chart, Sultan Center topped with a decline of 56.9 percent followed by Gulf Investment House and Hilal Cement with declines of 40 percent and 33.7 percent, respectively. The monthly market breadth was heavily skewed towards decliners that included 98 stocks as against 46 gainers.

Saudi Arabia (Tadawul)

Saudi Arabia benchmark recorded the best monthly performance during March-18 with the TASI surging 6.1 percent on the back of investor enthusiasm surrounding the FTSE upgrade. The month saw increased buying in key large-cap stocks that have the possibility to be included in the FTSE Secondary Market Index. According to the index compiler, $5.5 billion in passive funds are expected to flow to Saudi market after the upgrade that will start in 2019. The Kingdom is expected to attract an even higher inflow of capital once the foreign ownership limits are gradually raised in line with GCC neighbors. The enthusiasm is expected to continue to remain high as the MSCI decision would be announced by June-18, that would further boost the Kingdom’s attractiveness in the GCC.

Abu Dhabi Securities Exchange

The ADX index remained broadly range bound in Mar-18, similar to Feb-18, as the index marginally declined by 0.3 percent m-o-m. The index closed at 4585.4 points as sectoral performance was mixed for the month. The Energy sector was the best performing index, as the index was up by 10.7 percent m-o-m, driven by a 22.7 percent jump in the share price of Dana Gas. Telecoms (+2.6 percent m-o-m) and Investment & Financial Services (+1.3 percent m-o-m) indices followed the sectoral gainers list. Etisalat drove the increase in Telecoms as the stock gained by 2.6 percent m-o-m, while Waha capital (+1.4 percent) was responsible for the gains in the Investment & Financial Services index. The Insurance index was the main laggard as it went down by 4.2 percent m-o-m, led by declines of Abu Dhabi National Insurance (-11.2 percent) and Emirates Insurance (-6.7 percent). Industrials was also down in Mar-18 led by over 12 percent declines each in stock prices of Ras Al-Khaimah Ceramic and Arkan Building Materials. The Real Estate index declined by 3.0 percent m-o-m, driven by a 1.4 percent fall in large cap Aldar’s share price, while Ras Al Khaimah Properties declined by 17.1 percent m-o-m.

Dubai Financial Market

After declining by 4.4 percent in Feb-18, the DFM index continued to decline in the month of Mar-18, and was the worst performing index in the GCC. The index declined by 4.2 percent m-o-m and closed at 3108.53 points, as all sectoral indices barring Industrials closed lower during Mar-18. Consumer Staples was the main laggard yet again after plunging by 12.8 percent in Feb18, as the index further declined by 12.7 percent m-o-m in Mar-18 and is the worst performing index YTD. DXB Entertainment was again the main reason behind the decline, as the stock dropped by 12.4 percent m-o-m in Mar-18, after declining by 13.3 percent in Feb-18. The other large stock in the index, Dubai Refreshments also fell by 11.7 percent m-o-m. The Services index also fell by double digits (-11.1 percent m-o-m), as National General Cooling and Amanat Holdings closed significantly lower and witnessed declines of 13.4 percent and 9.5 percent respectively. The financials pack also saw m-o-m declines in Mar-18 as Financial and Investment Services names (-5.3 percent) led the move down, followed by the Insurance (-4.1 percent) and Banks (-2.9 percent) indices.

Qatar Exchange

Qatar Exchange continued its decline in Mar-18, but remained relatively stable as compared to its other GCC counterparts and a sequential m-o-m basis. The QE 20 index declined by 0.9 percent m-o-m to close at 8573.99 points in Mar-18. The Qatar All Share index which maps the broader market however gained by 3.2 percent m-om, as sectoral performance included both gainers and losers for the month. Real Estate was the best performing index during Mar-18 as it gained by 7.9 percent m-o-m, driven by Ezdan Holding as the stock was up by 15.4 percent for the month. Industrials names also gained by 6.5 percent m-o-m, driven by Qatar Electricity & Water and Aamal as their stock prices jumped by 9.9 percent and 9.0 percent m-o-m. Transportation was the worst performing sectoral index as it declined by 4.0 percent m-om as all stocks in the index declined. Insurance names followed as the index declined by 2.4 percent m-o-m in Mar-18, as all stocks barring Doha Insurance (+1.4 percent) saw lower levels for the month.