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Gulf markets were optimistic in August in anticipation of the US Federal Reserve rate cuts, but geopolitical uncertainty and fall in oil prices kept gains in check, according to a new analysis from Kuwait Financial Centre (Markaz).
The S&P GCC composite index inched up marginally by 0.3% for the month. Among the gainers, Dubai and Saudi Arabia equity indices went up by 1.3% and 0.3%, respectively. The Qatar stock index also inched up by 0.5% for the month.
However, other markets were not as upbeat, with the Kuwait equity index registering a 0.8% decline for the month, although it posted year-to-date returns of 5.3%, and the Abu Dhabi stock index registering a marginal loss of 0.6%.
“Fall in oil prices and concerns about escalation of geopolitical risks overshadowed the growing optimism on US Fed interest rate cuts,” the report said.
On the IPO front, however, overall activity across the MENA region remained resilient, with proceeds raised during the second quarter of the year reaching $2.64 billion, up by 45.3% from a year earlier, the report noted, citing data from EY.
Factors affecting markets
As for Dubai and Saudi markets, the gains were supported by investors’ positive sentiment following expectations that Gulf lenders’ income will remain elevated after the outperformance in the second quarter of 2024, the report said.
Net income for listed banks in the GCC went up by 9.2% to $14.8 billion compared to a year earlier.
In Saudi Arabia, shares of Saudi Telecom Company also went up by 11.7% in August after a new three-year dividend policy was announced.
In Qatar, the gains were supported by a surge in natural gas prices.
In Abu Dhabi, the index for the month was dragged down by the performance of a few blue-chip stocks. International Holding Company fell by 2.6%, as the company posted a 29.8% year-on-year decline in net profit for the second quarter, while Aldar Properties’ shares dipped by 0.7%.
In Kuwait, banking stocks fell 1.4% in August, with NBK and KFH share prices falling by 3% and 1.4%,respectively. KFH has agreed to divest its entire stake in UAE’s Sharjah Islamic Bank, while Gulf Bank and Boubyan Bank are looking at the possibility of a merger.
Inflation in the country jumped by 3% year-on-year in July, outpacing the 2.8% increase in the previous month. Fitch, however, maintained a stable outlook for Kuwait’s rating at “AA-”.
(Writing by Cleofe Maceda; editing by Seban Scaria)
