According to the latest market report from Rasmala Investment Bank, global markets wrapped up another strong month with Q3 earnings numbers largely taking a back seat to macroeconomic data regarding economic growth, a global currency debate and talk of excess liquidity coming into the market by means of the US Federal Reserve. Decent earnings came out of the US with every major stock index rising in October. Concerns about slow economic growth were balanced by expectations that the US Federal Reserve would take further steps to stimulate the economy in its quantitative easing decision in early November.
On a regional level, the focus was on local Q3 earnings results while investors continued to closely monitor mixed news from the global economy. The DFM and ADX in the UAE were the strongest performing markets in the MENA region for the second straight month.
MENA markets underperformed international equity markets yet both indices made solid gains during the month. The Bloomberg GCC 200 Index climbed 2.2% on the back of positive performances from most regional markets. Global indices had a monthly gain of 3.7% as measured by the MSCI World Index. On a YTD basis, the region continues to fare better than international markets up 8.4% compared to a YTD gain of 4.6% for international markets.
United Arab Emirates
The DFM and ADX gained 4.8% and 5.4%, respectively, in October erasing losses from earlier in the year. On a YTD basis, the DFM remains in the red, down 2.2%, while the ADX has moved into the green, up 2.6%.
In the real estate sector, market heavyweight, Emaar, reported a 7.0% drop in Q3 net profit, missing analysts’ estimates, on higher costs and write-downs. Emaar announced that its Indian joint venture, Emaar MGF, will take all possible action to protect the entity’s interests amid allegations of irregularities in the development of the Commonwealth Games Village. The stock ended the month up 3.2%. Aldar Properties gained 5.2% in October. Shares of Union Properties finished up 2.2%. Deyaar Development also made gains, up 3.1% on the month. Meanwhile, Sorouh Real Estate increased 1.7% on the ADX.
In telecoms, UAE Blackberry services continued as normal after reaching an agreement on October 8th with Research In Motion averting a ban planned for October 11th. Du CEO, Osman Sultan, expects earnings to continue to grow even as competition in the UAE intensifies. Du obtained USD 255mn in financing from the Export-Import Bank of China as it seeks to repay debts and upgrade its network. Du selected Nokia Siemens Networks to upgrade its mobile network operations in the UAE. The stock soared 18.6% on the month. ADX heavyweight, Etisalat, reported Q3 net profit of AED 1.74bn, down 22.8% from a year earlier. Etisalat is confident in obtaining financing to purchase a 46% stake in Kuwait’s biggest phone company, Zain, and has appointed two financial advisers, according to the company’s Chairman Mohammed Omran. The stock ended October 6.1% in the green.
The Tadawul index dipped 0.6% in October after gaining 4.7% in the previous month. On a YTD basis, the region’s largest exchange is 3.8% in the green.
Market bellwether, Saudi Basic Industries Corporation (SABIC), reported a Q3 net profit jump of 46% on higher prices, increased demand for its products and income from units, beating analysts’ estimates. SABIC CEO confirmed the sale of USD 1bn of bonds. The stock surged 8.6% in October. SABIC affiliate, Saudi Kayan Petrochemical, reported that Q3 net loss widened to SAR 5.1mn from SAR 3.7mn in the previous year because of currency rates. The stock ended the month flat. Meanwhile, Sipchem finished October in the green, up 4.3%.
The KSE index finished the month up 1.1% bringing the index into the green for the year at 0.8%.
Gulf Bank of Kuwait had a nine-month net profit of KWD 10.4mn after a loss of KWD 7mn for the same period a year ago. The stock ended October 3.9% in the green. Meanwhile, National Bank of Kuwait posted a net profit of USD 790mn in the first nine months of the year. National Bank of Kuwait raised the bank’s capital by 10.0% to USD 1.3bn and the capital increase was more than five times oversubscribed. The stock dropped 3.4% on the month. Shares of Commercial Bank of Kuwait fell 4.3%.
The DSM 20 continued to gain on the year, rising another 1.3% to bring year-to-date gains to the highest among the GCC indices at 12.0%.
In the banking sector, Qatar National Bank reported a nine-month net profit of QAR 4.2bn and shares surged 8.2% in October. Al Ahli Bank of Qatar reported a nine-month net profit rise of 44.4% and shares gained 10.5% on the month. Commercial Bank of Qatar reported a 29% increase in Q3 net profit, beating analysts’ estimates on reduced provisions and increased interest income. The stock closed 2.5% in the red. Meanwhile, Qatar Islamic Bank posted a 62% rise in Q3 net profit, missing analyst estimates, amid a pickup in economic growth, and shares closed down 5.6% on the month.
The MSM index gained 1.2% in October and is now 2.9% in the green on a YTD basis.
In the banking sector, Bank Muscat announced that nine-month net profit dropped 11.1% compared to the year-earlier period but the stock gained 2.8% on the month. Bank Dhofar reported an 18.1% rise in nine-month net profit compared to the year-earlier period and shares rose 2.7% in October. National Bank of Oman led the gains, up 5.6% on the month, and reported a nine-month net profit increase of 10.7% from a year earlier. Meanwhile, Bank Sohar ended the month flat.
In telecoms, Nawras shares were listed on the stock market on November 1st at OMR 0.702. The IPO of Nawras did not manage to attract as much retail interest as hoped with retail buyers taking up only 38.5% of the IPO, despite 70% being reserved for retail investors. Meanwhile, Omantel announced that it expects subscriber growth of 12-15% over the next year. Shares of Omantel slipped 0.2% in October.
The EGX gained for a fourth consecutive month, up 0.5% in October. On a YTD basis, the index is 7.4% in the green.
Russian wireless operator, VimpelCom, agreed to buy the telecommunication assets of Egyptian billionaire, Naguib Sawiris, in a USD 6.5bn stock-and-cash deal. Orascom Telecom’s Algerian unit, Djezzy, remains a roadblock in the deal. Algeria said it would buy 100% of Djezzy after the Egyptian company settles its debts. Orascom Telecom will have to pay USD 230mn in debts as well as USD 190mn in fines for money transfers. Shares tumbled 12.5% in October. Landline monopoly, Telecom Egypt, gained 0.4% in October. Meanwhile, Mobinil reported a Q3 net profit drop of 41% from a year earlier and shares fell 2.4%.
In real estate, Talaat Moustafa Group and SODIC rose 7.4% and 1.6% on the month, respectively. Meanwhile, Palm Hills Development Company ended the month 1.7% in the red.
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