09 January 2012
•All GCC markets ended FY2011 on a lower note, except Qatar Exchange which added marginal gains

•Market capitalization of GCC stock markets declined by 7.1 percent in FY2011

Global Investment House - GCC Markets Performance - FY2011 - Stock markets worldwide had a turbulent time in the year 2011. GCC markets were no different, as they plunged due to weakness of international economic environments. In addition to that, the political tension that spread throughout the Middle East, added to the markets' woes. Consequently, all GCC bourses ended FY2011 on a lower note, barring the Qatari market which managed to eke out marginal gains.

 

Qatar Exchange appreciated by 1.12 percent by the end of FY2011, thus being the only GCC stock market to record gains for three consecutive years. Despite the global financial crisis, Qatar has prospered in the last several years. IMF figures forecasted that Qatar's real GDP to pick up by about 19 percent in 2011. Qatar's successful 2022 world cup bid is also expected to accelerate large-scale infrastructure projects such as Qatar's metro system and the Qatar-Bahrain causeway.


On the negative side, Bahrain Bourse posted the steepest decline amongst its GCC peers, down by 20.15 percent for the year. 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.

 

In Kuwait, Global General Index ended with a 19.78 percent YoY decline, with all sectoral indices ending the year on a negative note. Global Investment Sector Index posted the steepest decline, shedding 30.39 percent of its value in 2011. The services sector index followed with a 29.51 percent decline on the back of the notable retreat of several services stocks, including heavyweight Zain which lost around 31.8 percent of its share value.

 

In the meantime, the performance of Saudi stocks has seen some improvement during 4Q2011, thanks to the distribution of good dividend by listed corporations. Tadawul All Share index appreciated by 5.0 percent QoQ by the end of 4Q2011, which brought down the index's loss to 3.07 percent in 2011. 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 to large declines of other GCC stock exchanges.

 

Market Capitalization

Market capitalization for the GCC markets stood at USD697.4bn (adjusted for cross listed companies) by the end of December 2011, down by 7.1 percent compared to end of year 2010. The Saudi market constituted 48.6 percent of the aggregate market capitalization of GCC stock markets.

 

Market Breadth

Country

Advancers

Decliners

Unchanged

Total

Bahrain

             5

            29

             5

          50

Kuwait

           48

           150

            16

        214

Oman

           24

            71

            20

        123

Qatar

           20

            22

            -  

          42

Saudi

         101

            46

             3

        150

UAE

           22

            84

            25

        131

Total

         220

           402

            69

        710

The breadth of the GCC markets was titled towards decliners during FY2011, with 402 stocks ending on a lower note compared to 220 advancing stocks, while 69 stocks remained unchanged.

 

The market spread was negative in five out of the six GCC markets; except in Saudi, which was the only market that had a positive advancers to decliners' ratio.

 

GCC Trading Activity

Total volume of shares traded during FY2011 stood at 133.8bn shares, which was 21 percent lower than aggregate traded volume in FY2010. In the meantime, value of shares traded increased from USD296.7bn in FY2010 to USD356.1bn in FY2011, up by 20 percent.

 

Country

Total Volume

(mn shares)

Total Value (USDbn)

Market Cap. (USDbn)*

Transactions (000)

Bahrain

519.0

                                 0.3

                               17.4

                               11.7

Kuwait

                         38,343.0

                               21.8

                             105.3

                             617.8

Oman

                          2,366.2

                                 2.5

                               16.9

                             359.6

Qatar

                          2,302.8

                               22.9

                             125.6

                          1,119.1

Saudi

                         48,535.8

                             292.9

                             338.8

                        25,546.9

UAE

                         41,694.1

                               15.7

                               93.6

                             732.9

Total

                       133,760.9

                             356.1

                             697.4

                        28,388.0

* Total GCC market capitalization is adjusted for cross-listed companies

Source: Respective GCC stock markets & Global Research

 

IPO's

IPO activity in the GCC continued to decline, as sluggish market sentiment discouraged private corporations to go public, and forced them to seek other funding options. During 2011, only nine GCC companies offered their shares to the public (FY2010: 12 IPO), with an aggregate value of USD795.6mn, down by 54.9 percent compared to the previous year.

 

This year's IPOs were mainly concentrated in Saudi Arabia, with five Saudi companies floating their shares. The remaining offerings were one in Oman, and three in UAE.

 

As for 4Q2011, all IPOs took place in Saudi Arabian market. Hail Cement Company offered 50 percent of its SAR979mn (USD261mn) paid up capital to the public in an IPO priced at SAR10 per share, during the period from September 20 to September 26. The company's offering was 130 percent oversubscribed.

 

In December 2011, two more Saudi companies offered their shares to the public. United Electronic Company (Extra) offered 30 percent of its SAR240mn (USD64mn) capital in an IPO priced at SAR55 per share, during the period from December 05 to December 11. Extra's IPO was more than two times covered as overall subscription reached SAR851.1mn (USD227mn).

 

The last public offering of the year was that of Saudi Enaya Cooperative Insurance Company, which took place between December 19 and December 25, 2011. Enaya offered 40 percent of its SAR400mn (USD106.6mn) capital to the public, at a price of SAR10.

-Ends-

© Press Release 2012