Region's bourses show signs of slowing

09 February 2012

Uncertainty in the region impact stock market performance

The Tehran Stock Exchange (TSE) has been one of most active bourses in the region. The TSE grew some 30 per cent over 2011 and the market capitalisation is currently about $127bn.

A large initial public offering (IPO) from the local Parsian Oil & Gas Development Company is expected to take place next week. A conservative estimate of the value is $400m, according to analysts if Parsian floats 10 per cent of its shares. Appetite for trading on the TSE is high, but concerns over sanctions are increasing among investors.

“The TSE has a lot a bit of value, after the devaluation of the Iranian Riyal about a month ago,” says Ali Mashayekhi, head of investment research at Iran-based brokerage firm Turquoise Partners.

The exchange rate began to rally as a result, but the TSE lost 3 per cent over the past two weeks due to price correction.

“Looking at it from a long-term view, tensions are rising up, the risks are far higher than six months ago because of the sanctions,” says Mashayekhi.

Investor sentiment has also been hit in Egypt. The street violence that erupted in Cairo last week leaving 74 dead pushed down the Egyptian Exchange by more than 2 per cent on 2 February. Shockwaves from the violence were felt in the Dubai Financial Market (DFM) General Index, which fell 1.21 per cent , closing at 1,435.96. The EGX lost a further 1 per cent on 6 February as the county’s largest listed investment bank EFG-Hermes dropped 4.5 per cent, the most since 22 November following the travel ban on chief executive officer, Yasser el-Mallawany.  

Saudi Arabia’s Tadawul All-Share Index (Tasi) declined for the first time on 6 February after a two-week rise, falling 0.30 per cent to close at 6,738.91 points after market bellwether Saudi Basic Industries Corporation (Sabic) shares fell to SR95.25.

Kingdom Holding Company advanced 2 per cent on 7 February after the firm announced a SR43.8m expansion of subsidiary Kingdom Centre Company. Telecoms operator Etihad Etisalat (Mobily) gained 0.43 per cent after Saudi brokerage firm Riyad Capital raised its price target on its stocks to SR74 from SR12 on the back of expected double-digit revenue growth following successful year-end results.

Sabic, whose shares account for 12 per cent of the Tadawul’s market capitalisation helped the Tasi reach a 22-month high on 8 February, closing at 6,797.09 points after the firm’s stocks closed 0.52 per cent higher at SR95.75.

The Indian Supreme Court’s decision on 2 February to cancel all second-generation licences has impacted Emirates Telecommunications Corporation (Etisalat) whose subsidiary Swan, was involved in the corruption probe. The operator lost 0.32 per cent on 8 February, dragging the Abu Dhabi Securities Exchange (ADX) down 0.15 per cent to close at 2,464.88 points.

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