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Worst performing MENA stocks

09 January 2012

The Middle East North Africa markets lost more than USD100-billion in 2011, according to Zawya's market analysis tool.



Gulf markets alone lost USD52-billion, despite significant revenues generated by high crude prices during 2011, which kept the economies in great shape.

The Gulf states also benefited from economic packages unveiled by virtually all the six GCC states, but investors were more concerned about Arab Spring, geopolitical tensions, slow growth in the U.S. and a sovereign debt crisis in Europe to pay to much attention to domestic stimulus.

Egypt Stock Exchange lost a whopping USD34-billion, or 42.5%, as the country suffered from political tensions between the army and pro-democracy forces after the departure of president Hosni Mubarak, who was ousted in a wave of popular uprising.

Lebanon also lost 20.3% in the year, or USD1.5 billion in the year, emerging as the second worst MENA market during the year.

Bahrain, the most troubled Gulf state, was not far behind.

"The Bahrain bourse posted the steepest decline amongst its GCC peers, down by 20.1% for the year," said Kuwait-based Global Investment House in a report. "The kingdom's economy is estimated to have lost up to USD2bn due to political unrest that hit Bahrain in 1Q2011. All sectoral indices ended the year 2011 on a negative note, with only a handful of stocks ending the year with gains."

But it was Kuwait stock exchange index which saw more than US20-billion, or 16.4% during the year. While the country escaped the worst of the Arab Spring, it suffered from political deadlock, which resulted in the storming of parliament and dissolving of the Cabinet. Kuwaiti authorities spent much of the year bickering and failed to proceed with an ambitious program to diversify away from oil revenues.



Investors responded by exiting the index, as real estate and financial services continued to weigh in on the economy. Problems with key companies such as MTC also did not help investor sentiment.

Saudi Tadawul, the region's largest market lost USD14-billion in the year, or 3% during 2011. High oil revenues and a generous stimulus package was offset by regional troubles, and the market came out fair-to-middling given the global investment climate.

"Despite its negative performance, which was mainly due to external factors such as worries over international markets and the economic situation around the world, the Saudi market managed to end the year with marginal loss, compared large declines of other GCC stock exchanges," notes Global Investment House in a report.

Abu Dhabi and Dubai lost 11.7% and 17% respectively through 2011. Combined with Nasdaq Dubai, the UAE markets lost around USD13-billion in the year. Abu Dhabi now has the lowest price-to-earnings ration among MENA markets at 8.14, even lower than Egypt's 8.19. Dubai, at 9.56, is not far behind making UAE markets one of the cheapest in the region. Combined with excellent infrastructure and stable oil revenues, UAE markets appear ripe for a boost in the near future.

Qatar, which has a 12.84 price-to-earning ratio is the most expensive in the region. Doha Stock Market was the investor darling last year as the country appeared to ignore global and regional slide and chart its own path to prosperity on the strength of gas revenues.

Despite the global financial crisis, Qatar has prospered in the last several years. IMF figures showed that Qatar's real GDP, which has recorded one of the world's highest growth rates over the past decade, leaped by nearly 175 in 2010 and is forecast to pick up by about 19% in 2011, says Markaz.

The Qatari exchange rose 1.1% during the year and was easily the best performing market in the region and the only one that rose during the 12 tumultuous months.



Saudi Arabia's Qassim Agriculture was the best performing stock, according to EFG-Hermes, based on its coverage universe.

Six Saudi stocks made it into the top ten, as Saudi companies benefited from the domestic stimulus.

At the other end of the spectrum, not surprisingly, Egyptian companies dominated the top worst performing stocks in 2011. Seven Egyptian companies found themselves as the region's worst performers, with SODIC leading the way with 30.5%, according to EFG-Hermes estimates.



Bahrain's InvestCorp., once the darling of investors fell 30.5% as global investor sentiment deteriorated.

Sabic was by far the most traded stock in the region, clocking in 143.6 million on average per day in 2011.



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