KUWAIT: Negative sentiments prevailed in the GCC equity markets during May-15 as a largely muted Q1-15 earnings performance failed to maintain positive investor sentiments that was seen during the previous month. Q1-15 earnings for a majority of the markets saw only a marginal growth although the core Banking sector saw an overall strong first quarter.
Moreover, negative sentiments were exacerbated by oil price that trended downward during May-15. External factors like the concerns over Yemen and its impact on the political situation in the GCC, in addition to global events like the Greece situation and its impact on Europe, the relatively weakening USD as compared to the more recent uptrend as well as the uncertainty and delay in rate hike in the US also affected markets in the GCC.
Nevertheless, there were also several positive data points across the GCC that provided strong support to market indices. On one hand the euphoria over Saudi market opening up on 15th June, 2015 led to hopes of higher fund raising activity in the primary market with two IPOs already executed on the Tadawul and the one more in the pipeline (Saudi Ground Services). The Saudi CMA also announced measures that would lead to higher allocation to institutional investors in IPO on a case by case basis. Moreover, there were also speculations that shareholders of Network International LLC, Emirates NBD and Abraaj Group, are mulling an IPO of the payment processing firm.
Meanwhile, the MSCI in its semi-annual review announced several changes and adjusted weightages of constituent companies. The index aggregator added Emaar Malls to its UAE Index whereas Ezdan Holding and Qatar Insurance were added to the Qatar Index. Meanwhile, the weightages of ADCB and Doha Bank were increased in their respective indices. MSCI also published a standalone index for Saudi Arabia which included 19 stocks.
Kuwait market
KSE witnessed a steep downturn during May-15 as investors remained on the sidelines leading to low trading activity during the month. The stock market saw a declining trend since the beginning of the month after lackluster earnings results resulted in depressed investor sentiments. Q1-15 earnings reported by listed companies on the KSE declined by 2.0 percent to KD 492.3 million as compared to KD 502.5 million during Q1-14. A majority of the oil-related companies recorded a steep decline in Q1-15 earnings as seen in 17.8 percent decline in total earnings for the Oil & Gas sector. Nevertheless, the Banking and the Financial Services sector recorded higher quarterly earnings with a growth of 13.9 percent and 38.5 percent, respectively, during Q1-15.
KSE indices declined during the month with the KSE Weighted Index witnessing a steep decline of 3.0 percent to close at 421.83 points by the end of the month. As a contrast to the previous month, investors primarily sold large-cap stocks which was evident from the 4.1 percent monthly decline for the KSE 15 Index for May-15 as compared to a strong monthly return during the previous month. A majority of the constituent stocks in the KSE-15 index declined during the month (a total of 10 stocks declined as against 3 gainers and 2 stocks ended flat) led by the Zain which declined by 10.31 percent due to a 26.5 percent decline in Q1-15 earnings. Agility was the second largest decliner in the index with a monthly fall of 8.9 percent despite recording improvement in quarterly earnings during Q1-15.
Meanwhile, the KSE Price Index was down by almost 1.3 percent whereas the KAMCO TRW Index declined by 1.9 percent trailing the decline in KSE Weighted Index. YTD-15 index performance that saw some improvement after the positive market performance in the previous month once again plunged to negative 3.9 percent for the KSE Weighted Index and 3.7 percent for the KSE Price Index. On the other hand, total market capitalization also slid by 7.8 percent for YTD-15 overtaking 7.7 percent decline during full year 2014 primarily on the back of several delistings during the year.
In terms of sector performance, a majority of the large-cap sectors i.e. Banking, Telecom, Financial Services and Real Estate all closed the month with negative returns, whereas the Insurance, Basic Materials, Health Care and Consumer Goods sectors recorded positive performance. The decline in sectoral indices was led by the Oil & Gas Index due to the ongoing concerns related to oil prices whereas a majority of the banking stocks declined solely on the back of low investor sentiments. The monthly gainers chart was topped by ISKAN that resumed trading after being suspended since December-14. Other gainers included Al Deera (+42.5 percent) that recorded earnings improvement during Q1-15 and Al Qurain Holding (+36.0 percent) which reported losses for Q1-15. The losers chart was topped by IPG (-23.4) due to the fall in oil related earnings followed by Salbookh Trading (-22.4 percent) and Zima Holding (-16.9 percent).
Saudi Arabia (Tadawul)
After a strong run during April-15, the Saudi stock market saw profit taking during May-15 that resulted in a slight market contraction of 1.5 percent to close at 9,688.7 points. Moreover, concerns regarding Yemen also affected markets, but the euphoria surrounding the opening up of the Saudi market to foreigners, which is expected to start from 15th June, 2015, largely offset some of the other concerns. Nevertheless, the Saudi market still leads the GCC in terms of YTD-15 performance that stood at 16.3 percent by the end of May-15. The decline in market capitalization was slightly less than the TASI owing to the listing of two companies during the month, i.e. Middle East Paper Co. (MEPCO) and Saudi Company for Hardware (SACO).
Abu Dhabi Securities Exchange
ADX General Index declined by 2.6 percent during May-15, the third steepest decline during the month as compared to other GCC equity markets. The decline was broad-based as seen from the negative performance of a majority of the large cap sectors. The Banking index declined by 2.2 percent as most of the banks recorded negative monthly returns with the exception of ADCB and CBI. NBAD fell by 4.1 percent during the month bringing the YTD-15 decline to 15.1 percent in spite of reporting upbeat results for FY14 and an almost flat Q1-15 net profits. Other large-cap banks that declined during the month included FGB (-2.6 percent), UNB (-5.1 percent) and National Bank of Ras Al Khaimah (-3.75 percent). Among the gainers, CBI gained 11.1 percent during the month although the trades in the stock remained very marginal (AED 89.7,000).
Dubai Financial Market
The Dubai stock market plunged 7.2 percent during May-15 falling below the psychologically important 4,000 mark as lack of positive catalysts triggered investors to book profits after a successful bull run during the previous month. In addition to the fall in oil prices and the problems in Yemen, one of the other key factor that contributed to the market weakness was the lackluster earnings for Q1-15 which was almost flat year-on-year. With the decline in May-15, the YTD-15 gains for the DFM has currently pulled back to 4.0 percent by the end of the month.
Meanwhile, listed companies on the DFM recorded an almost flat Q1-15 earnings which stood at AED 7.1 Bn as compared to Q1-14. The Banking sector reported a strong 41 percent year-on-year increase in earnings primarily powered by 60.3 percent increase in Q1-15 net profits of Emirates NBD further supported by higher profits for the rest of the banks (with the exception of Amlak Finance and Al-Salam Bank).
Qatar Exchange
Among the active GCC equity markets, the Qatar Stock Exchange saw the smallest monthly decline during May-15 recorded at 1.0 percent for the QE20 Index and 0.9 percent for the Qatar All Share Index indicating a broad-based decline especially during the last week of the month due to negative news flow surrounding FIFA. The QE20 Index briefly plunged below the 12,000 mark due to steep consecutive declines on 27th and 28th May 2015 (a total decline of almost 4.1 percent for the two trading sessions) after news related to FIFA shook investor confidence in the economy that is seeing large scale infrastructure development as it prepares to host the FIFA World Cup in 2022. Banking and Real Estate stocks were the hardest hit stocks due to their exposure to the Qatari infrastructure market.
Nevertheless, the index saw strong support and it recovered on the final day of the month closing above the 12,000 mark. The decline in market capitalization was even higher during the month at 1.7 percent to record QAR 641.8 billion.
Bahrain Bourse
Bahrain Bourse continued to decline during May-15 falling by almost 1.9 percent during the month although the stock exchange witnessed improvement in monthly trading activity, an exception as compared to the other GCC markets. The YTD-15 returns currently stands at 4.4 percent for the Bahrain All Share Index and 2.7 percent for total market capitalization which stood at BHD 7.9 billion at the end of the month. The weakness was broad based as reflected in the sectoral index performance which recorded negative returns for all the sectors except for the Investments index that saw marginal monthly returns during the month.
Muscat Securities Market
As an exception to the rest of the GCC markets, the MSM remained the only stock market to record positive monthly performance during May-15. The MSM30 Index recorded a positive monthly return of 1.0 percent resulting in positive YTD-15 gains of 0.7 percent by month end. However, total trading activity saw a steep decline during the month with volumes declining by almost a third to 229 million shares during May-15 as compared to 332 million shares during the previous month. Total value traded also declined by almost OMR 27.2 million or 28.14 percent to OMR 69.5 million as compared to OMR 97 million during April-15. Consequently, average daily value traded declined from 15.1 Mn shares to 11.5 Mn shares and average value traded fell from OMR 4.4 million during April-15 to OMR 3.5 million during May-15.
© Kuwait Times 2015
