MENA Markets Trends - January 2014

Transcription

1 Kuwait Financial Centre Markaz R E S E A R C H Research Highlights: Review of global and regional stock markets for January 2014 Markaz Research is available on Bloomberg - Type MRKZ <Go> Thomson Research, Reuters Knowledge Nooz Zawya Markets ISI Emerging markets Capital IQ FactSet Research Connect TheMarkets.com M.R. Raghu, CFA, FRM Head of Research rmandagolathur@markaz.com N.C. Karthik Ramesh Manager - Research Ext : 4611 kramesh@markaz.com Nivas Lakshminarasimhan Analyst Ext : 4606 nlakshminarasimhan@markaz.com Kuwait Financial Centre K.P.S.C Markaz P.O. Box 23444, Safat 13095, Kuwait Tel: Fax: markaz.com MENA Markets Trends - January 2014 Source: Reuters, Zawya, Markaz Research The Month That Was MENA, GCC and the World Country Index Liquidity Valuation Saudi Arabia % -0.4% Qatar % 1.7% Abu Dhabi % 3.3% Kuwait % 0.0% Dubai % 8.0% Egypt % 0.0% Morocco % -1.6% Jordan % 0.0% Bahrain % 2.2% Oman % 1.6% S&P Pan Arab 4.91 N.A. N.A. The only good news for equity markets came from the MENA region as nearly all indices ended the month on a positive note. Qatar, Dubai, Abu Dhabi, Egypt and Jordan indices rose over 7 per cent in January. Solid asset growth, wider interest margins, declining non-performing loans and improved earnings in the banking sector buoyed the markets. The S&P GCC index moved up 3.4 per cent in the month of January to close at 123 points. Dubai and Abu Dhabi indices produced returns of almost 12 per cent and 9 per cent respectively, while Egypt moved by 8.6 per cent. There was an overall improvement in market liquidity, with Morocco being the only exception to the trend. P/E of Egypt, Kuwait and Jordan remained unmoved, while valuations of Abu Dhabi, Dubai and Bahrain increased. The Kuwait weighted index has the highest P/E ratio of 18x followed closely by the Dubai index at 17.5x. Jordan, Qatar, Abu Dhabi and Morocco have dividend yields over 4 %. With relatively low P/E values and high dividend yields, Qatar and Abu Dhabi markets continue to be a bet for investors. 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 31.5 per cent in January, to USD 50.2billion compare to USD 38.2billion in December. Saudi Arabia and UAE together account for 85% of the total value traded in the MENA region. While Bahrain, Oman, Jordan, and Morocco together contributed just over 1.9% to the total value traded in January. While there were no changes in the top 10 large cap MENA companies, drastic changes were seen in the top 10 mid cap stock list. Only two companies,

2 Heliopolis (UAE) and Al Maha Petroleum Products Marketing Co. (UAE), from the list in December made it to the top 10 list in January. In the small-cap segment, Jerusalem Insurance (Jordan), Cairo Development and Investment (Egypt), Delta Insurance (Egypt) and Jordanian Expatriates Investment Holding (Jordan) were new entries for the month of January. The Blue Chips list remained largely unchanged. Saudi Telecom Company recorded profits of SR 10billion in 2013 as compared to SR 7.3billion in 2012, with fourth quarter profits surging to SR 3.6billion, beating analyst expectations. Shares of the company rose by 11 per cent in the month of January after witnessing a 24 per cent rise in National Bank of Abu Dhabi posted a near 10 percent increase in share price, on the back of rising business confidence, increasing deposits and soaring real estate prices. Aldrees Petroleum and Transport services and Cairo Development and Investment Co. recorded the highest monthly increase in the month of January, in the mid-cap and small-cap categories. Shares of the former rose by 13 per cent, while the latter s shares posted a 23 per cent increase. Mesaieed Petrochemical Holding Co. (Qatar) and Saudi Marketing Company (KSA) went for an IPO. Shares of Mesaieed Petrochemical Holding Co (MPHC), a subsidiary of Qatar Petroleum (QP), were fully subscribed and raised QR 3.23billion (USD 880million) million shares, constituting a 25.7 per cent stake, were offered at QR 10.2 per share. The shares are expected to be listed on Qatar Exchange in. Saudi Marketing Company, engaged in retail and wholesale trading of foodstuff, household consumer goods, toys, fabrics, and stationery items, is offering 7.5million shares at SR 36 per share to raise SR 270million. This represents a 30 per cent stake of the company. Over 1.4million investors subscribed to the IPO and shares would be listed on Tadawul after completing legal documentation and obtaining necessary approvals from the Capital Market Authority. Investments in the non-hydrocarbon sector by Dubai and ongoing reforms in Abu Dhabi have turned the UAE into the most diversified economy in the region. Investments in airport capacity and facilities expansions in UAE after Dubai s win to host the World Expo 2020 will provide vast growth opportunities for the global aviation industry. Dubai is expected to invest more than USD 8billion in new infrastructure to host Expo Total spending related to the Expo, including private sector projects, could reach USD 18.3billion. Kuwait Financial Centre Markaz 2

3 Global Markets Review Equity close MTD% YTD% S&P GCC MSCI World 1, S&P 500 1, MSCI EM MSCI FM Fixed Income US Treasury 10Yr Bond Commodities IPE Brent Gold 1, Source: Reuters, Markaz Research Global equities were hit hard in January, as the MSCI world index dropped by close to 4 per cent. Emerging markets continued to slide due to slow growth in both China and India. For FY13, India revised down its GDP from 5 per cent to 4.5 per cent, while China expanded by its lowest rate in 14 years at 7.7 per cent during Oil prices remained above USD 100/bbl at month s close, despite a drop in value of 4 percent due to profit-selling. Gold prices witnessed an upswing, as investors moved away from risky assets, closing at USD 1243 up 3.2 per cent from December close. The US markets were driven by a combination of positive economic data, with increasing retail sales growth and decreasing unemployment, and falling corporate earnings. Concerns about monetary policy tapering caused the fall in S&P 500 index by 4 per cent. At the end of the month, the Federal Reserve decided to trim its bond purchases by another USD 10billion and to keep interest rates low, as Ben Bernanke prepares to exit as the Fed Chairman. Despite persisting deflationary concerns, Europe had a good start to the year, as data released in January showed an improved growth in industrial and services output, and declining unemployment. But FTSE, CAC and DAX declined in the month of January by 3 per cent, 3.2 per cent and 2.3 per cent respectively. Nikkei Index closed the month at 15,384 points, falling 4.9 per cent since December close. The slowdown continued in emerging markets as Shanghai Index dropped 3.1 per cent and BSE Sensex (India) fell by 2.3 per cent. The MSCI EM Index fell by 6.6 per cent in the month of January. Kuwait Financial Centre Markaz 3

4 Appendix MENA Index Returns Jan S&P ADVT* P/E P/B Index (USD Bn) close 2013% 2014% correlation** (USD mn) TTM TTM S&P Pan Arab Composite LargeMid Cap N.A N.A Saudi Arabia 476 8, , Qatar , Abu Dhabi 120 4, Kuwait Weighted Index Dubai 70 3, Egypt Morocco 55 9, Jordan 22 4, Bahrain 20 1, Oman 19 7, Source: Reuters, Markaz Research, * - Monthly Average Daily Value Traded, ** - 3-year daily return correlation MENA TOP 10 LARGE CAP Companies Country (USD bn) Close MTD % YTD % 2013% P/E P/B Beta Saudi Basic Industries Corp SJSC Saudi Arabia Qatar National Bank SAQ Qatar Saudi Telecom Co SJSC Saudi Arabia Industries Qatar QSC Qatar Al Rajhi Banking and Investment Corp SJSC Saudi Arabia Emirates Telecommunication Corp Ltd UAE Kingdom Holding Co Saudi Arabia Etihad Etisalat SJSC Saudi Arabia National Bank of Abu Dhabi PJSC UAE Saudi Electricity Co SJSC Saudi Arabia Source: Retuers, Markaz Research MENA TOP 10 MID CAP Companies Country (USD mn) Close MTD % YTD % 2013% P/E P/B Beta Cairo Amman Bank PSC Jordan Capital Bank of Jordan PSC Jordan Gulf Medical Projects Co PSC UAE United Wire Factories Co JSC UAE Medicare Group QSC Qatar Aldrees Petroleum and Transport Services Saudi Arabia Heliopolis Housing and Construction UAE Allianz Saudi Fransi Cooperative Insurance Saudi Arabia Al Maha Petroleum Products Marketing Co UAE Al Themar International Holding Co KSCC Kuwait Source: Retuers, Markaz Research Kuwait Financial Centre Markaz 4

5 MENA TOP 10 SMALL CAP Companies Country (USD mn) Close MTD % YTD % 2013% P/E P/B Beta United Paper Industries BSC Bahrain Zellidja Ste SA Morocco Jerusalem Insurance Co PLC Jordan Beltone Financial Holding SAE Egypt Masafat for Specialised Transport Co PLC Jordan Industrial Engineering Co for Construction and Development SAE Egypt Cairo Development and Investment Co SAE Egypt Hayat Pharmaceutical Industries Co PLC Jordan Delta Insurance Co SAE Egypt Jordanian Expatriates Investment Holding Jordan N.M Source: Retuers, Markaz Research Blue Chips Company (USD bn) Close MTD % YTD % 2013% P/E P/B Beta Saudi Arabia Saudi Basic Industries Corp SJSC Saudi Telecom Co SJSC Al Rajhi Banking and Investment Corp SJSC Kingdom Holding Co Etihad Etisalat SJSC Qatar Qatar National Bank SAQ Industries Qatar QSC Ooredoo QSC Ezdan Holding Group QSC Masraf Al Rayan QSC UAE Emirates Telecommunication Corp Ltd National Bank of Abu Dhabi PJSC First Gulf Bank PJSC Emaar Properties PJSC Emirates NBD Bank PJSC Kuwait National Bank of Kuwait SAK Kuwait Finance House KSC Mobile Telecommunications Co KSC Boubyan Bank KSC Gulf Bank KSC Kuwait Financial Centre Markaz 5

6 Company (USD bn) Close MTD % YTD % 2013% P/E P/B Beta Morocco Itissalat Al Maghrib Ste SA Attijariwafa Bank SA Banque Centrale Populaire SA Douja Promotion Groupe Addoha SA Centrale Laitiere SA Egypt Orascom Construction Industries SAE Commercial International Bank Egypt SAE Global Telecom Holding SAE Telecom Egypt Co SAE National Societe Generale Bank SAE Jordan Arab Bank PLC Arab Potash Co PLC Jordan Telecommunications Co PLC Jordan Phosphate Mines Co PLC Jordan Islamic Bank Co PLC Bahrain Ahli United Bank BSC National Bank of Bahrain BSC Bahrain Telecommunications Co BSC Arab Banking Corporation BSC BBK BSC Oman Bank Muscat SAOG Oman Telecommunications Co SAOG Bank Dhofar SAOG Raysut Cement Co SAOG Omani Qatari Telecommunications Co SAOG Source: Reuters, Markaz Research, * - Local currency Kuwait Financial Centre Markaz 6

7 Disclaimer This report has been prepared and issued by Kuwait Financial Centre K.P.S.C (Markaz), which is regulated by the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. Any user after obtaining Markaz permission to use this report must clearly mention the source as Markaz.This Report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to its accuracy or completeness. Markaz has no obligation to update, modify or amend this report. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is historical and is not necessarily indicative of future performance. Kuwait Financial Centre K. P.S.C. (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. For further information, please contact Markaz at P.O. Box 23444, Safat 13095, Kuwait. Tel: Fax: research@markaz.com

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