GCC MSCI index sparks passive fund outflow, sees gains in November

The broader GCC gauge (MSCI GCC Index) saw gains during November, after three consecutive months of decline, primarily on the back of Kuwait, Saudi Arabia and Oman that showed low single-digit gains, according to Kamco, a leading regional investment firm.

These gains were partially offset by declines in the UAE and Qatari benchmarks. The 3.7 per cent gains in Kuwait's All Share Index once again pushed the Kuwaiti market to the top spot in terms of year to date gains at 16.7 per cent followed by Bahrain at 14.2 per cent, the leading investment company with one of the largest AUMs (assets under management) in the region said in its "GCC Markets Monthly report - November 2019."

The decline in UAE and Qatar came mainly on the back of the rebalancing in MSCI's EM index that led to an outflow of passive funds during the last week.

The ADX index, after closing in October as the best performing market in the GCC, ended in the red (-1.5 per cent) in November while the DFM closed in the red for the second consecutive month in November, and was the worst performing GCC index for the month.

Across the GCC, in terms of sector performance, gains were mainly driven by the materials sector that witnessed a growth of more than two per cent during the month. The banking and the Energy sectors closely followed with monthly gains of around 1.7 per cent. Gains in the Materials sector was led by regional cement stocks in addition to Sabic that gained 3.8 per cent during the month while, Saudi Arabian Mining, the second biggest stock in the sector, gained 1.3 per cent.

In the banking sector, Saudi and Kuwaiti banks featured as top performers during the month with double to high single digit gains during the month. While globally, equity markets were largely positive during November following the trends seen during the previous month, trading activity in the GCC continued to decline for the third consecutive month and reached a nine-month low of $20.3 billion in November, primarily led by a 10 per cent decline in value traded in Saudi Arabia.

In Dubai, the benchmark DFM index was down 2.5 per cent month on month and closed at 2678.7 points. Sectoral trends were mostly negative barring the Industrials and Services index, as they gained by 4.4 per cent and 0.8 per cent respectively month on month. The industrials sector outperformance was single-handedly driven by National Cement Co that gained by 4.4 per cent m-o-m, while the services index was buoyed by a 2.2 per cent gain in Tabreed's share price. Real estate and construction was the worst performing index and was down by 5.2 per cent month on month. Key drivers for the underperformance was a 33.5 per cent decline in the share price of Arabtec, followed by declines for Emaar Development (-11.1 per cent) and Damac Properties (-9.4 per cent). Arabtec's decline can be largely attributed to the net loss reported to parent of Dh380 million, attributable to Arabtec Construction.

In Abu Dhabi, the index closed at 5030.76 points as sectoral performance was mostly negative and market breadth favoured decliners. Consumer staples was the best performing sectoral index and gained by 7.6 per cent month on month in November, driven by International Holdings Company, as its share price gained by almost 13 per cent. Services names followed with gains of 6.6 per cent, as Abu Dhabi National Hotels gained by 14.7 per cent month on month.