Kuwait Financial Centre “Markaz” recently released its Monthly Market Research report. In this report, Markaz examines and analyzes the performance of equity markets in the MENA region as well as the global equity markets.
Equity markets from the MENA region continued to increase as nearly all indices ended the month on a positive note. Dubai and Egypt led the region rising by 12 and 9% respectively, while Jordan registered the only decline at 2.5% in February.
The S&P GCC index moved up 3.3% in the month of February to close at 127 points. The S&P Pan Arabian Composite LargeMid Cap Index rose by 4.1% to close at 175 points. Abu Dhabi, Bahrain and Qatar recorded returns of over 5%. While overall market liquidity improved in the region, value traded declined in Abu Dhabi, Kuwait and Jordan.
P/E of Jordan remained unmoved, while valuations of the rest of the MENA countries increased. The Dubai index has the highest P/E ratio of 19.6x followed closely by the Kuwait Weighted Index at 18.2x. Jordan, Qatar, Abu Dhabi and Bahrain have dividend yields over 4%. With relatively low P/E values and high dividend yields, Bahrain, Jordan and Abu Dhabi markets might be offering value. Morocco, Saudi Arabia and Qatar have high price-to-book ratios (around 2x), while Jordan and Bahrain have low P/B ratios.
The value traded in the MENA markets rose by 10.5% in February, to $55.5b illion compared to $50.2 billion in January. Saudi Arabia and UAE together account for 83% of the total value traded in the MENA region. Bahrain, Jordan, and Morocco together contributed less than 1% to the total value traded in February. Oman and Morocco witnessed the biggest month-on-month increase in value traded at 223 and 146%, respectively.
IPO: Shares of Takaful Oman Insurance, constituting a 40% stake worth OMR 4.08million, were listed in the first week of February. The company’s share offer was oversubscribed to the tune of five-and-a-half times – four times in the case of retail segment and seven times by institutional investors. The Dubai Financial Market is close to gaining its first new listing since 2009 after Marka, a retailer, announced plans to launch an Dhs500m initial public offering that would make it the country’s first publicly listed retailer.
Marka has already received preliminary approval from the Securities and Commodities Authority (SCA) and is expected to launch the IPO on the DFM as per schedule. 55% stake representing 275 million shares would be offered to the public in an IPO at a price of Dh1 per share. The Saudi Arabian government has planned to sell 15% stake in the country’s largest lender, the Jeddah-based National Commercial Bank (NCB), in an IPO. This would be the country’s first IPO since 2008. The market regulator’s approval for the IPO is expected to be sought in the third quarter of this year.
Global equities rallied in February, as the MSCI world index rose by close to 5%. Despite contraction in manufacturing growth in China, emerging markets showed some signs of recovery, as the MSCI EM index ended the month at 966, rising by 3%. The news of strong lending growth in January buoyed the markets, as banks circulated the highest number of new loans in almost four years in January. But this prompted the central bank to drain almost $8bn out of money markets, to control lending activity. Emerging markets improved marginally as Shanghai Index rose 0.4% and BSE Sensex (India) grew by 2.3%.
IPE Brent declined by 1.6% in the month of February, as energy consumption in the US was down to its lowest level since last June, despite a cold winter. Oil prices continued to remain above $100/bbl at month’s close, closing at $109.1/bbl, despite the drop in value. Gold prices continued to rise, closing at $1326 up 6.6% from January close.