MENA equity markets remained almost flat for the first month of 2010. Uncertainty surrounding Dubai’s debt crisis continued to overshadow the UAE market’s performance, despite announcements from some government related entities (GREs) confirming that part of their debt obligations had been met.
The UAE market was the poorest performing market during January 2010 while Tunisia and Egypt were the best performing regional markets for the month, each recording a MTD gain of 8.8%. Morocco came in second in terms of performance with a 4.6% MTD gain.
One of the factors contributing to the lukewarm trading performance of regional indices was the US President’s announcement during the last week of January 2010, which outlined his new plan to limit banks from investing in hedge funds seeking proprietary profit. This in turn caused a number of regional indices to suffer sharp one-day declines in the subsequent trading session.
MENA markets outperformed both emerging markets and the US market in January. MSCI Arabia remained flat, versus a loss of 3.7% for the S&P 500 and a decline of 5.6% for MSCI EM.
In the UAE, DP World, a subsidiary of Dubai World Holding Company announced that it distributed the 180-day coupon payment totaling USD 46.9 million on its USD 1.5 billion bond issue due in 2017. DP World also stated that it completed a coupon payment totaling USD 59.9 million during December 2009 on its USD 1.8 billion bond issue due in 2037. The DFM index dropped 11.8% over the course of the month while the ADX index fell 4.0%.
In Saudi Arabia, despite the losses that were incurred during the last week of the month, Saudi Arabia’s Tadawul (TASI) performed well during January 2010, gaining 2.1% MTD and reversing the previous month’s decline. The TASI was the third best performing index in the Arab region this month. Companies’ financial results dominated the market during January, with most blue chips recording earnings that exceeded market expectations which positively impacted the overall index performance.
Egypt shared the position of best performing market in the MENA region with Tunisia in January. The EGX 30 gained 8.8% on a MTD basis on the back of numerous events. Some of the major highlights included EFG-Hermes’ sale of its stake in Bank Audi, Orascom Construction Industries' 50/50 joint venture with Morgan Stanley and most notably the ongoing dispute between France Telecom and Orascom Telecom Holding over Mobinil.
The Kuwaiti Stock Exchange index traded sideways to gain a modest 0.3% in the first month of 2010. The index failed to perform this month due to the lack of catalysts, as no significant news announcements were made by the major blue chip constituents. Moreover, investors remain cautious, as they await the Q4 09 financial results.
Following its 3.3% decline in December, Qatar’s DSM continued its downtrend and fell a further 5.8% in January. Part of the DSM’s losses, could be attributed to the US President’s announcement to limit banks from investing in hedge funds seeking proprietary profit. The DSM index dipped 1.6% in the trading session after the announcement.
The Omani market ended January up 2.6%. The main highlight of the month was the earnings announcements for the fourth quarter of 2009. Several banks reported Q4 09 results, which came below comparable quarters as banks’ bottom lines were hit mainly by higher than expected loan loss provisions.
