Abu Dhabi Securities Exchange Review
The Abu Dhabi Securities Exchange, as measured by ADX General Index, rose 5.66% in February to end as the best performing market in the GCC region, on speculation of higher dividends in the banking sector. The buying spree witnessed by investors helped push the ADX General Index to a three year high, crossing the 3,000 mark, as confidence was replenished that a recovery was underway. Accordingly, market breadth was heavily skewed towards the gainers with advancers-to-decliners ratio of 40-to-12 while 11 companies remained unchanged from last month. Liquidity indicators increased during the month as volume was up by 38% to 4.5 bn shares while value rose 12% to AED 5 bn from AED 4.5 bn in January-13. Total market capitalization added 5.39% to AED 329 bn (USD 89.6 bn) in February supported by the 5.46% increase in heavyweight banking sector to reach AED 155.1 bn and the telecommunication sector adding 5.18% to its value to stand at AED 118 bn in February-13.
Regarding corporate earnings, 55 out of 63 companies released FY-12 financials with aggregate earnings increasing 16% to AED 33 billion from AED 28.4 billion in 2011 on the back of the 9.2% rise in banks net profit from AED 17.7 billion in 2011 to AED 16.2 billion in 2012 and the real estate sector posting a whopping 104.4% increase in FY-12 earnings to AED 2.2 billion. In the banking sector, heavyweight National Bank of Abu Dhabi (NBAD) reported a 16.8% increase in earnings to AED 4.3 billion in 2012 up from AED 3.7 billion in 2011. NBAD's net profits for Q4-12 were AED 1.1 billion, up 54.8% from AED 724 million in Q4-11. First Gulf Bank, the UAE's second-largest lender by market value, reported a 12.1% rise in FY-12 net profit to AED 4.1 billion from AED 3.7 billion in 2012 boosted by higher interest income and Islamic financing; while Abu Dhabi Commercial Bank reported a 32% jump in quarterly net profit as the bank made fewer provisions and non-interest income grew. Abu Dhabi Commercial Bank (ADCB), the UAE's third largest lender by market value posted a 10% drop in earnings to AED 2.7 billion in 2012 from AED 3 billion in 2011. ADCB's 2011 profit was boosted by a one-off gain of AED 1.3 billion after the sale of a stake in Malaysia's RHB Capital. Impairment allowances for Q4-12 totalled AED 402 million, with total 2012 provisioning amounting to AED 1.71 billion, down 29% from 2011.
In the real estate sector, Aldar Properties reported a 109% increase in net profit to reach AED 1.3 billion in FY-12 from AED 642 million in FY-11. A strong final quarter drove revenue for the year to AED 11.4 billion compared to AED 6.7 billion in 2011. The increase was driven by the continued success of our on-going program of unit and land plot deliveries to our customers including the Government of Abu Dhabi. For the year, Aldar recognised significant revenues from its development business of AED 10 billion (2011: AED 5.4 billion) from the sale of units, land plots and project management fees. Recurring revenues increased by 10% to AED 1.4 billion (2011: AED 1.3 billion). Rental income from investment properties, which include Aldar's office, residential and retail portfolio, increased to AED 634.2 million (2011: AED 541 million) and operational businesses such as operative villages, schools and hotels generated AED 803.8 million (2011: AED 766.4 million).
Dubai Financial Market Review
Further speculations of a strong economic recovery in Dubai, specifically in the banking and property sectors, coupled with strong FY-12 earnings and hopes for strong dividends have helped shore investor confidence benefiting the local stock market. The DFM General Index soared to a three year high, nearing the psychological level of 2,000; driven by the surge in Emaar properties share price after announcing its plan to build two luxury hotels and serviced apartment towers in central Dubai. Emaar said it would accept offers in Dubai and Riyadh for The Address Residence Sky View project. As a result, the DFM General Index ended the month of February in the green, following its GCC peers, and remains the best performing market in the GCC region in 2013. In line with the positive performance during the month, the bourse's market cap added 2.7% to its value to reach AED 200.9 bn (USD 54.7 bn) supported by the banking and real estate & construction sectors gaining 2.7% and 4.2% to AED 55.7 bn (USD 15.2 bn) and AED 42.2 bn (USD 11.5 bn), respectively. Liquidity fell during the month of February, with volume and value down by 37% and 19% to 4.8 bn shares and AED 7 bn, respectively, over 66,529 transactions.
Regarding corporate earnings, 32 out of 57 companies announced FY-12 earnings with aggregate earnings increasing 63% to AED 12.4 billion in 2012 from AED 7.6 billion in 2011 on the back of a 27% rise in banking earnings to AED 6.2 billion in 2012 from AED 4.9 billion in 2011 and a whopping 274% increase in the real estate & construction sector to AED 2.6 billion from AED 701 million in 2011. In the banking sector, heavyweight Emirates NBD reported a 3% growth in earnings to reach AED 2.55 billion as compared to AED 2.48 billion in 2011 due to lower impairment allowances and the absence of impairments on the Bank's investments. On the other hand, Mashreq Bank reported a 60% growth in net profit to AED 1.3 billion in FY-12 from AED 820 million in FY-11 while Dubai Islamic Bank witnessed its earnings increase 13.3% to AED 1.2 billion from AED 1.05 billion during the same period. In the real estate & construction sector, Emaar Properties reported an 18.1% increase in net profit to AED 2.1 billion from AED 1.8 billion in 2011. However, the developer posted a 28% drop in Q4-12 earnings to AED 512 million from AED 716.7 million in Q4-11. Revenues during 2012 were little changed, recording AED 8.2 billion versus AED 8.1 billion. Emaar said that the company's shopping malls & retail and hospitality & leisure businesses contributed AED 4.1 billion, representing 50% of total revenues; while Emaar's international operations' revenue amounted to AED 1.3 billion, and representing 15% of total revenue. In the telecom sector, DU's earnings were up by 80.4% to AED 1.98 billion in FY-12 from AED 1.1 billion in FY-11. DU net profit growth of 55.8% to AED 2.82 billion in 2012 before royalty as its revenues rose 14.7% to AED 10.16 billion. DU said it had more than doubled its Q4-12 profits as it wrote back royalty provisions while recording an increase in subscriber base.
Meanwhile on the economic front, the UAE's economic growth in 2013 is likely to surpass the estimates given by the International Monetary Fund, or the IMF, an official of the UAE Central Bank said. The IMF predicted that the UAE's GDP would accelerate by 3.7% in 2013 and sustain a growth of 3.4% in 2014. In 2012, the UAE economy is estimated to have grown by around 4%, at a pace higher than the rate forecast by the IMF that put real GDP growth at 3.4%. At that rate, the size of the UAE economy, driven by fast-growing oil and non-oil sectors, would have surpassed the predicted AED 1.4 trillion mark in 2012.
In addition, the Ministry of Economy expects that the UAE is likely to sustain the momentum being witnessed in its non-oil sectors during the last two years and prop up the overall economic growth rate to almost 4% in 2013. However, the Economy Minister said economic growth will also depend on the rest of the region, particularly on how countries in the Middle East fare through the crisis and how much of that impacts the UAE. The rising confidence in the economy is evident from the waning reliance on the oil sector and increased activity in trade, investment, tourism and logistics. The UAE's non-oil foreign trade registered a positive growth during the first eight months of 2012. According to data from the Federal Customs Authority, non-oil foreign trade was up 11.5% during the January-August period at AED 678 billion, compared with AED 608 billion during the same period in 2011. Exports grew 49%, marking an increase from ADE 37.3 billion to AED 112.8 billion compared with AED 75.5 billion in the same period of previous year. Imports climbed by 11% driving UAE non-oil imports up from AED 388.4 billion to AED 431.7 billion in the comparative period.
Regarding the economy of Dubai, Dubai's overall business sentiment is on a steady upswing as its economy looks set to sustain its growth momentum on the back of increasing activity across core sectors such as trade, tourism, manufacturing and real estate, a survey reveals. The composite Business Confidence Index for Dubai reached 135.9 points in Q4-12, a 10.8% increase compared to the previous quarter and a 2% growth from Q4-11, the Department of Economic Development (DED) said. The Dubai government's dual-tranche landmark transaction, which has raised $1.25 billion, generated an aggregate order book that was 12 times oversubscribed, signalling that the investor community strongly supports Dubai's resilient growth model.
ABOUT KAMCO
Established in 1998 with the mission to significantly alter the local and regional investment landscape, KAMCO is a premier investment company based in Kuwait. A subsidiary of United Gulf Bank (UGB) - the investment banking subsidiary of Kuwait Projects (Holding) Company (KIPCO) - KAMCO was listed on the Kuwait Stock Exchange (KSE) in 2003.
After many years of conducting business in Kuwait's dynamic investment industry, KAMCO has successfully established a robust reputation for solidity, characterized by its prudent, conservative investment philosophy which has consistently commanded the goodwill of a wide patron-base.
KAMCO's main activities are Investments and Asset Management. Its Investments Division specializes in different sorts of investments, financial and advisory services, and investment research which tracks the latest directions and trends across regional and local economies as well as equity markets.
With regards to the Asset Management Division, its activities concentrate on providing customized portfolio management, access to IPOs, and local and international fund management in addition to maximizing returns, mitigating risks, and maintaining capital appreciation for individual and institutional clients.
All of the above operate within the spirit of transparency and exclusivity with the client's best interests at heart.
The company will further aggressively build upon its core competencies to offer MENA-wide investment management consultancy and services, backed by its proven track-record in stringent risk mitigation, investment product innovation, and a cautious investment approach towards local, regional and international capital markets.
© Press Release 2013
