Regional stock markets continue to rise

06 August 2013

GCC stock markets break new records

Stock markets in the GCC are continuing to rise following earnings announcements by major regional companies, attracting local investors in particular to invest in stocks. Over the past month markets in Dubai, Abu Dhabi, Egypt and Saudi each rose at least 2 per cent.

At the beginning of August, the Dubai Financial Market General Index was among the best-performing markets regionally and globally. It rose 63.6 per cent year-on-year, breaking three-year highs following strong earnings results by companies such as Emaar Properties, Emirates NBD and Du.

The Abu Dhabi exchange rose 49.4 per cent year-on-year, breaking its 2008 record after Aldar Properties’ and National Bank of Abu Dhabi reported positive financial results.

Egypt’s benchmark index, the EGX30, entered overbought territory in August following a statement by US Secretary of State John Kerry in support of the Egyptian army. Primarily, local investors have been heavily buying stocks following the military coup that saw former president Mohamed Mursi removed from office. So far the stock exchange is up 2.8 per cent for the year to date.

Record gains following protests at the end of June were in sharp contrast to the stock market’s performance in the final weeks of Mursi’s presidency. Starting in mid-May, the stock market declined sharply, causing the EGX30 to drop 12 per cent year-on-year just before the protests started.

While Saudi companies’ performances have been mixed, the Saudi Stock Exchange (Tadawul) is also overbought, increasing 18.7 per cent year-on-year in August.

Kuwait has been consolidating during the past month, declining 0.7 per cent over the past month, but still up 35.1 per cent on a year-on-year basis, while Qatar and Oman both rose about 1 per cent in the past month. They are up 17.3 per cent and 16.5 per cent respectively compared with the same month last year.

In June, index compiler MSCI announced it will upgrade Qatar and the UAE to emerging markets status in May 2014. Foreign inflows from passive funds are expected to be anywhere between $400m and $1bn, though some analysts warn overexuberance could lead to a sharp drop following the actual reclassification event.

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