GCC markets remain subdued as Tadawul trends downwards

Volatile oil prices and geopolitical risks continue to weigh on markets

KUWAIT: GCC markets witnessed minimal volatility during Oct-19 and saw slight weakness as majority of the markets closed the month with marginal changes. Trends during the month reflected cautious investor sentiment on the back of weak economic growth, volatile oil prices and geopolitical risks. Saudi Arabia saw the biggest decline during the month as the benchmark lost 4.3 percent after failing to offset the losing streak seen during the first half of the month that pushed the market to a 12-month low level.

On the other hand, Abu Dhabi’s 1 percent gain was the highest during the month followed by Kuwait and Bahrain. The mixed market performance resulted in a 2.7 percent decline in the broader MSCI GCC Index. The sector performance chart reflected broad-based decline during the month with almost all the sectors ending weaker during the month. From among large cap sectors, Materials, Telecom, Insurance and Consumer Services declined at the GCC level, while the Banking sector remained flat. STC and Mobily were the biggest decliners in the telecom sector. Trading activity also took a hit during the month after almost all the markets in the GCC, barring Oman, reported a decline in value traded. Total monthly value traded stood at $21.5 billion as compared to $23.9 billion indicating a m-o-m decline of 10 percent.

Meanwhile, global markets continued to post positive performances despite concerns relating to the still unresolved trade war between the US and China. The MSCI World index gained 2.5 percent during the month on the back of a slightly higher surge in the EM index while US and most other developed markets also showed low single digit gains. An expected 25 bps cut in US Fed rates pushed US indices to record high at the end of the month but the pause in rates over the near term was a bigger takeaway for the investors. The confusion over an extended Brexit affected FTSE’s monthly performance resulting in a slight decline, whereas, crude remained volatile but closed the month above the $60/b mark.

Kuwait

After two consecutive months of decline that wiped off more than 7 percent of gains for the Boursa Kuwait, the exchange witnessed marginal gains during October-19. All the three benchmarks closed the month with marginal gains with minimal volatility. Also, for the first time this year, monthly gains for the Main Market index was slightly greater than the gains for the Premier Market index. The latter gained 0.6 percent during the month to close at 6,211.1 points and remained the best performing index in the GCC in terms of YTD-19 returns of 17.9 percent.

Monthly gains for the Main Market index stood at 0.9 percent that pulled YTD-19 returns for the index in the positive zone with marginal gain of 0.4 percent. For the All Share Market Index, gains of 0.7 percent in Oct-19 pushed YTD-19 returns to 12.6 percent, the second highest in the GCC after Bahrain.

The monthly sector performance chart showed mixed trends. The Banking index remained flat m-o-m with share performance of individual banks equally split between gainers/decliners. Gulf Bank was the biggest monthly decliner with a fall of 5.4 percent that came after the bank reported a 13 percent drop in 9M-19 profits. The Consumer Services index topped the monthly performance chart with a return of 6 percent primarily on the back of 9.4 percent gain in shares of Jazeera Airways, the biggest stock in the index, followed by 6.5 percent gain in shares of Kuwait National Cinema. The Telecom index was next with a return of 4.4 percent followed by the Real Estate and Oil & Gas indices with returns of 2.9 percent and 1.5 percent, respectively. Shares of all the three telcos gained during the month with Zain leading with a monthly return of 5.0 percent. On the decliners side, the Consumer Goods index witnessed the biggest fall of 6.4 percent after all the three stocks in the sector declined. The Insurance index was next on the list with a decline of 4.8 percent after a sector wide decline followed by Basic Materials index with a monthly decline of 3.0 percent.

The monthly gainers chart was topped by Arabi Holding after the stock more than doubled during the month. Noor Financials was next on the list with a gain of 58.8 percent followed by Ajial Real Estate and Al-Mudon Intl. Real Estate with monthly gains of 58.4 percent and 45.6 percent, respectively. On the decliners side, Danah Alsafat Foodstuff topped with a fall of 39.2 percent followed by Almal Investment and Ekttitab Holding with declines of 33.3 percent and 21.7 percent, respectively. Trading activity declined during the month in line with the broader monthly trend in the GCC. Monthly value traded declined by a third to reach KD 503.8 million in October19 as compared to KD 749.9 million during the previous month. Monthly volume also declined but at a much slower pace of 6.1 percent to reach 2.9 Bn shares as compared to 3.1 billion shares during September-19 indicating higher trades in large-cap stocks. KFH once again topped the monthly value traded chart with KD 72.4 million worth of trades followed by NBK and AUB-Bahrain at KD 48.6 million and KD 38.9 million, respectively. On the monthly volume chart, A’ayan Leasing topped with 261 million shares changing hands during the month followed by Arzan Financial Group and AUB - Bahrain with 142.8 million shares and 142.6 million shares, respectively.

Saudi Arabia (Tadawul)

Saudi Arabia’s TASI once again witnessed a monthly decline in October-19 after seeing marginal gains during the previous month. The benchmark fell 4.3 percent during the month to close at 7,744.1 points. By mid-month, the index had reached a 12-month low level of 7,481.53 points due to consecutive declines since the start of the month but recovered partially by the end of the month. As a result, the YTD-19 returns for the market remained in the red zone with a decline of 1.1 percent.

Abu Dhabi Securities Exchange

After a streak of m-o-m declines, the ADX index closed the month of Oct-19 in the green, and was the best performing index in the GCC, albeit marginally as the main index was up 1.0 percent m-o-m. The index closed at 5107.76 points, as sectoral performance was mixed. The Real Estate index was the best performing index as it soared by 11.7 percent m-o-m, as Aldar jumped by 12.4 percent in Oct-19. Aldar announced the placement of its fixed rate USD sukuk with a tenor of 10 years for a nominal amount of $500 million. The sukuk carries a coupon rate of 3.875 percent, and was over 6x oversubscribed, with global investors accounting for 71 percent of the total transaction allocation. Banks were also up 1.1 percent mo-m in Oct-19, driven mainly by FAB (+1.2 percent) and ADIB (+5.1 percent). Consumer Staples and Telecoms were also up and gained by 0.9 percent and 0.4 percent respectively. AGTHIA Group drove the Consumer Staples sector higher, while Etisalat were the main driver behind the gains of the Telecom sector.

Dubai Financial Market

After managing to close marginally in the green in Sept-19, the DFM index declined by 1.2 percent m-o-m in Oct-19 to close at 2,746.9 points. Sectoral trends were mostly negative; however, market breadth was even between gainers and decliners. The Insurance index was the worst performing sectoral index, declining by 5.2 percent m-o-m, driven down by Takaful Emarat (-17.6 percent) and Islamic Arabic Insurance (-9.5 percent). The Industrials sector (-4.2 percent) was dragged down singlehandedly by a 4.2 percent drop in National Cement Co. Contrary to trends witnessed on the ADX, the Real Estate & Construction index on the DFM was down by 3.4 percent in Oct-19, as Emaar Properties receded by 7.4 percent m-o-m.

Qatar Exchange

After gaining in Sept-19 (+1.3 percent), Qatar Exchange was amongst the decliners in the GCC, as the QE 20 index declined by 1.7 percent and closed at 10,188.97 points. The Qatar All Share index which maps the broader market, also exhibited similar declining trends, as the index declined by 1.5 percent m-o-m for the month. Market breadth favored decliners, as 17 stocks gained, while 27 stocks closed the month in the red. Sectoral performance was mixed and contained both gainers and decliners. The Real Estate index was the best performing index with gains of 2.2 percent m-o-m, driven by a 2.9 percent m-o-m gain in the share price of Barwa Real Estate, and a 5.3 percent jump in United Development.

The Bahrain All Share continued its streak of m-o-m gains and remains one of the best performers in the region YTD at the end of Oct-19 (+13.9 percent), as the index was up 0.4 percent during the month of Oct-19. Sectoral performance was mixed for the month and had both gainers and decliners. Services was the best performing index, with marginal gains of 1.4 percent, followed by Commercial Bank (+0.9 percent). The rest of the financials pack stayed broadly stable with Investment companies and Insurance gaining by 0.1 percent each respectively.

MSM broke the two month rising streak during October-19 and declined marginally by 0.4 percent to close at 3,999.9 points. The index saw minimal volatility during the month and hovered around the closing level. The decline was broad based as seen in the decline in all the sectoral indices. The Services index saw the biggest decline of 2.1 percent followed by Industrial index with a decline of 2.0 percent while the Financial index declined by 1.0 percent. The decline pushed YTD-19 returns for the MSM 30 index further in the negative zone to reach -7.5 percent, the biggest index decliner in the GCC.

Bahrain Bourse

Muscat Securities Market