According to the latest markets report from Rasmala Investment Bank, the European markets were seriously impacted by Ireland's financial crisis, which faces a EUR 34 billion bill. The European Union fears that Portugal might be the next country to require a bailout. The Federal Reserve announced that it will buy an additional USD 75 billion a month of Treasury bonds through June 2011, bringing the total purchase to USD 600 billion. On a regional level, the DSM 20 (Qatar) was the strongest performing market in the MENA region, while the DFM and ADX were back in the red after two months of positive performances.
MENA markets outperformed international equity markets. The Bloomberg GCC 200 index lost 0.1% during November due to the underperformance of some key players in the region. Global indices recorded a monthly loss of 2.35% as measured by the MSCI World Index. On a YTD basis, the region's performance continues to surpass international markets, up 8.33% compared to a YTD gain of 2.10% for international markets.
United Arab Emirates
In the UAE, the DFM and ADX were back in the red this month with a drop of 5.34% and 3.10% respectively bringing YTD losses for the DFM to 7.98% and the ADX to 0.54%.
In the real estate sector, Emaar Properties EGM approved the USD 500 million convertible notes issued last month. The CEO of Emaar Properties said that the company is planning to generate 50% of its income from abroad. He added that the best markets are Syria, Lebanon, Algeria and Saudi Arabia. The stock ended the month down 6.0%.
Aldar Properties reported a loss of AED 1.5 billion in Q3 due to a decrease in sales. It has around AED 22.1 billion projects under construction and has AED 4.67 billion in cash as of the end of September 2010. The company is in talks with the government of Abu Dhabi regarding cash requirements.
Dubai house prices fell 6% in Q3 from Q2 according to a study from Colliers. The Abu Dhabi Statistics office said that the capital (including Al Ain and western region) has 40,593 vacant property units and 10,000 under construction.
In the financial sector, Emirates NBD raised USD 410 million in a multi-currency loan fully subscribed by JP Morgan Chase at a 1.75% margin per year. Mashreq Bank posted a 9-month net income of AED 647 million and also cut 50 jobs as part of its restructuring.
In telecoms, Etisalat's deal to buy Zain is unlikely to be completed before Q1 2011 and is subject to Zain Saudi's stake sale. Etisalat was granted a rating of A+ by Fitch based on its stable outlook. Du reported a boost in Q3 net income to AED 163.1 million vs. AED 78.55 million, beating all consensuses.
In transport and logistics, Emirates Airlines reported an increase in H1 net income, achieving AED 3.4 billion and a cash balance of AED 12.5 billion as of end of September. There is speculation that Dubai may sell stakes in Emirates Airlines.
According to the Ministry of Economy, the UAE economy should grow 3-3.5% in 2011 with a 46% budget allocation to education, healthcare and social services. GDP is expected to reach AED 1 trillion by year end. October M1, M2, and M3 money supply rose respectively 4%, 7.4% and 5.1% from a year ago.
The Tadawul ended the month in the red after losing 0.34% compared to the previous month. On a YTD basis, the region's largest exchange is now 3.33% in the green. Market leader SABIC reported an increase of 3.1% during November and its affiliate Saudi Kayan Petrochemical gained 2.3%.
In the banking sector, Samba Bank led the losses as its stock went down 6.5%. SABB was also 5.2% in the red and the company plans to sell 5-year dollar denominated bonds. Rajhi Bank closed the month with an increase of 0.6% and it signed a SAR 50 million Murabaha deal with Herfy Food services. In addition, Banque Saudi Fransi posted a decline of 6.0%, with speculation it will raise the capital of its Syrian unit bank Bemo Saudi Fransi. Riyad Bank's performance improved this month; however, it is still 0.8% in the red. Furthermore, Saudi Hollandi Bank raised its provisions 6.5 times achieving SAR 249.8 million in Q3 compared to SAR 33.4 million in Q2.
In telecoms, Saudi Telecom Company's (STC) CEO affirmed that the company is interested in expanding to Iraq and the rest of the Middle East and he expects mergers of telecom operations in the region. Zain Saudi saw a 103% increase in mobile phone subscriptions during the Hajj Pilgrimage compared to the same period last year, the stock dipped 3.2%. It is important to note that Zain has appointed UBS to sell its stake in Zain Saudi.
The KSE index finished the month down 2.29% to bring the index into the red, down 1.5% for the year.
In banking, National Bank of Kuwait (NBK) received a 6-month extension for a share buyback. The stock dropped 5.9% during the month. Gulf Bank of Kuwait also reported a drop of 3.7%, whereas Commercial Bank of Kuwait gained 2.2% on the month.
Kuwait's October M1 and M2 slowed to 9.9% and 1.9% respectively and inflation slowed to 5.1% in October. Kuwait deputy PM Sheikh Ahmed Al Fahd said that Kuwait aims to increase non-oil revenue to KWD 4 billion by 2013/2014 begin_of_the_skype_highlighting 2013/2014 end_of_the_skype_highlighting. According to NBK, the country may post a budget surplus of KWD 5.3 billion for the current fiscal year. Kuwait is planning to spend KWD 6 billion on power and water projects by 2015 and expects to generate enough power to meet domestic demand by 2010 according to the Ministry of Electricity and Water
The DSM 20 index was the strongest performing index in the MENA region gaining 4.65% during November, accumulating YTD gains of 14.70%, the highest among the GCC indices.
In general, during November, most banks saw an increase in stock prices. In telecoms, Vodafone CEO said the company is looking for acquisitions outside Qatar but is not seeking to buy a stake in Zain Saudi. The stock was up 0.6%. Qatar Telecom unit Princesse said it will buy Orascom Telecom's 50% stake in Tunisiana for USD 1.2 billion. The transaction is expected to be completed by early January. Qtel gained 1.2% on the month.
For the second month in the row, market bellwether, Industries Qatar, reported an increase in share price pushing the stock 10.6% into the green. The Qatari Central Bank Governor expects the economy to grow by 16% in 2010 and the Minister of Finance said that Qatar's economic output will increase 21% in 2011 assuming an oil price of USD 70 per barrel.
The MSM index gained 0.77% in November and is now 3.55% in the green on a YTD basis.
In the banking sector, Bank Muscat led the gains, up 7.1% in November. National Bank of Oman was also in the green, gaining 1.4%. However, both Bank Dhofar and Bank Sohar lost 1.3% and 6.8% respectively.
Galfar Engineering and Contracting Company reported a 9-month net income of OMR 3.43 million a decrease of 65% since last year. Its venture with Cadagua won a contract for an Oman sewage project worth OMR 37 million, Galfar's stake is 55.6%. However, this month the stock was down 6.4%.
In telecoms, Omantel reported a 9-month net income of OMR 83 million due to higher operating costs. The stock increased by 0.2%. One month has passed since its IPO and Nawras' stock closed in the green, with 4.3% gains.
Oman's September M1 and M2 increased to 19.1% and 8.7% respectively.
The EGX gained for the fifth consecutive month, up 2.19 % in November. On a YTD basis, the index is 8.91% in the green.
In the financial sector, Commercial International Bank was rated BB+ with a stable outlook by Fitch, however, the stock price lost 4.2%. Both EFG-Hermes and National Societe Generale Bank were in the green up 17.4% and 12.2% respectively.
In telecoms, Mobinil retreated to second place behind Vodafone Egypt in terms of subscriber numbers for the first time since the introduction of mobile phones to Egypt in 1998. Mobinil's stock lost 2.3%. Meanwhile, both Weather Investments and Russian wireless operator, VimpelCom, said that they support Orascom Telecom's stake sell in Tunisiana for USD 1.2 billion. Orascom ended the month down 0.7%.
Amer Group is looking to raise about EGP 1.2 billion from a share sale, the company plans to sell 500 million shares on the Egyptian Exchange (representing 30% of its capital) with 80% of the shares sold through a private placement. IPO shares were priced at EGP 2.8 (the private placement was covered more than 3 times). According to Beltone, the Amer Group IPO was oversubscribed by 5.83 times.
In macro news, Egypt moved up in the consumer confidence index in Q3, to rank 21st in the world and inflation remained unchanged for October at 11%. Overnight deposits rate also remained unchanged at 8.25% and overnight lending rate at 9.75%. The tourism sector is expected to grow at least 18% by the end of 2010.