Inflation, recession fears keep GCC market on edge

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UAE - Tracking weak global trends, the aggregate GCC stock market index declined for the second consecutive month during June-2022 as inflation and recession fears kept investors on the edge.

Dubai’s DFM General Index reported the smallest decline among the GCC markets during June-2022 while Abu Dhabi’s FTSE ADX index fell from the best performing market in the GCC during May-2022 to the second worst performing market during June.

The MSCI GCC index witnessed a steeper monthly drop than last month at 9.0 per cent in June, witnessing a bigger drop than most other global equity markets, according to Kamco Invest’s GCC Monthly Market report.

Performance within the GCC was mostly negative with Saudi Arabia witnessing the biggest and a double digit drop of 10.8 per cent followed by Abu Dhabi and Qatari benchmarks with declines of 6.8 per cent and 5.6 per cent, respectively. Oman, on the other hand, was the only market that closed in the green with a marginal gain of 0.2 per cent.

Nevertheless, despite the two consecutive months of decline, the GCC aggregate index remained in the green in terms of 1H-2022 performance at +2.8 per cent with all headline GCC benchmarks in the green barring Oman that reported a decline of 0.2 per cent.

Abu Dhabi continued to boast double-digit returns of 10.4 per cent during 1H-2022 followed by Kuwait and Qatar with returns of 5.2 per cent and 4.9 per cent, respectively.

In June, FTSE ADX index fell from the best performing market in the GCC during May-2022 to the second worst performing market during. The index registered a decline of 6.8 per cent to close the month at 9,374.7 points, but the benchmark maintains its lead in the GCC in terms of YTD-2022 gains at 10.4 per cent. In comparison, the exchange’s market cap declined by 3.3 per cent during the month to Dh1.8 trillion. In terms of sector performance, the Real Estate index recorded the biggest monthly fall among the indices, registering 15.3 per cent decline during the month to reach 6919.9 points.

Trading activity on the ADX fell for the second consecutive month during June-2022. Total volume of shares traded reached 3.9 billion shares in June-2022 as compared to 4.9 billion shares traded during May-2022, registering a decrease of 18.8 per cent. Monthly value traded declined by 6.6 per cent to Dh28.1 billion in June-2022 as compared to Dh30.1 billion.

In Dubai, the benchmark DFM General Index declined for the second consecutive month by 3.7 per cent to close at 3,223.29 points after witnessing significant declines during the middle of the month. The monthly benchmark drop was led by fall in seven out of nine sectoral indices including large-cap sectors such as Real Estate, Financial & Investment Services and Telecom sectors. The Financials & Investment Services Sector index posted a monthly fall of 10.5 per cent after shares of Dubai Financial Market continued its declining trend during June-2022 registering a share price slide of 23.2 per cent during the month.

The Real Estate sector index witnessed the second biggest monthly fall among the indices registering a 8.2 per cent drop to close the month at 4,731.1 points mainly on the back Union Properties and Emaar Properties witnessing share price falls of 12.5 per cent and 8.9 per cent, respectively.

Shares of Emaar Properties got a boost at the start of the month after S&P upgraded the outlook on the company to Stable from Negative.

Across the GCC, the sector performance chart for the month showed declines across the board with all the sectors in the red. The Pharma & Biotech index reported the steepest decline of 19.4 per cent followed by Consumer Durable & Apparel and Diversified Financials with declines of 14.5 per cent and 12.9 per cent, respectively. Banks and Energy indices also dropped by 8.7 per cent and 5.0 per cent, respectively. However, in terms of 1H-2022 performance, Energy and Banks still feature in the top five performing indices with gains of 16.6 per cent and 6.9 per cent, respectively. Pharma & Biotech topped on the decliners side with a decline of 32.3 per cent followed by Consumer Durable & Apparel and Diversified Financials with declines of 30.2 per cent and 13.3 per cent, respectively.