Expo 2020 win, Fifa Cup and MSCI upgrade to keep investor sentiment high: Global

Thursday, May 08, 2014

The combined market capitalisation of GCC bourses increased 4.7 per cent month-on-month (MoM) to $1.1 trillion (Dh4 trillion) in April, Global Finance House said in its monthly report.

All indices, except Oman, witnessed a rise in market capitalisation during the month. With $520.7bn, the Saudi TASI was the highest contributor, followed by Abu Dhabi and Dubai ($218bn, or 19.9 per cent), and Qatar ($202.1bn, or 18.4 per cent). Kuwait, Oman, and Bahrain together contributed $156.8bn.

The volume traded climbed 20.3 per cent MoM, with all markets except Bahrain and Kuwait registering MoM growth. Global said the value traded rose 27.6 per cent MoM, primarily due to gains in Saudi Arabia, the UAE, and Qatar.

Bahrain registered the biggest rise in value traded (86.5 per cent MoM), followed by Qatar (64.3 per cent MoM) and Oman (54.6 per cent MoM). With $61.9bn, Saudi Arabia was the largest contributor to the total trading value. In terms of trading volume, the UAE led with 25.4bn shares.

Valuation remains fairly attractive

GCC equities ended April broadly higher on year-to-date basis, with real estate witnessing strong gains, led by decent results as well as overall optimism following Dubai's successful bid of World Expo 2020, Global's monthly report said.

The markets continue to remain fairly attractive going forward.

In terms of one-year forward PE, the six bourses traded in the range 9.4-13.3x. This is below GCC's three- and five-year historic average of 13.5x and 13.4x, respectively.

Moreover, the valuation is lower compared with similar frontier and key emerging markets, Global said.

Outlook

Most GCC indices ended in the green in April due to upbeat investor optimism after Q1 2014 results. However, during the end of April, lingering Ukraine crisis dampened the sentiment partially.

Nevertheless, Dubai continued its strong performance, following a recovery in its real estate sector.

Moreover, the market was driven by the financial services sector and the UAE's successful bid to host the World Expo 2020.

Qatar continues to witness a surge in economic activity leading up to the Fifa World Cup 2022.

This combined with an upgrade of Qatar and the UAE's market status by MSCI and S&P would keep investor sentiment high in the respective markets, Global noted.

In addition, regional heavyweight Saudi Arabia is expected to continue pursuing its aggressive infrastructure and housing development plans. Credit rating agency Fitch raised Saudi Arabia's long-term foreign and local currency issuer default ratings to 'AA' from 'AA-' due to strong balance sheets, government's efforts to combat unemployment and housing shortage, and the Kingdom's labour market reforms.

© Emirates 24|7 2014