MENA equity markets fell by 1.8% in October reducing year to date gains to 24.0%

Published November 11th, 2009 - 03:19 GMT

Mixed earnings announcements and weak global markets put the UAE markets under pressure in October. The DFM index gained a mere 0.3% while the ADX lost 3.2%. Despite strong results by key UAE companies, including Emaar Properties, Aldar Properties, National Bank of Abu Dhabi and First Gulf Bank, a number of UAE companies reported disappointing results raising concerns to the actual extent of earnings recovery by UAE companies.

Egypt was the second best performing Arab market in October, after the Lebanese market, maintaining its position as the best performing Arab market year to date. Egypt, which gained 3.0% in October, was one of few Arab markets to increase this month bringing its year to date gains to 51.5%. It was a positive month for most of the key Egyptian stocks, including Orascom Construction Industries, TMG Holding and SODIC. Unlike GCC markets, where companies have already announced their nine months results, Egyptian companies are due to announce their results in November.

The Tadawul lost 0.85% in October bringing its year to date gains to 30.5%. The largest 70 companies on the Tadawul index reported a Q3 09 net income growth of 14% compared to the previous quarter.  This increase was mainly due to a substantial earnings recovery from SABIC and Saudi Electricity, both reporting a net income increase of 102% and 142% respectively compared to Q2 09.  Excluding these two companies from the calculation, total companies' earnings would have shown a 5% decline compared to the previous quarter.  Earnings performances remain weak as 40 of the top 70 companies reported a decline in their bottom line compared to Q2 09.

Kuwait was the poorest performing Arab market in October as it lost 6.0% bringing year to date losses to 5.6%. Ongoing confusion over the potential sale of a stake in Zain as well as concern over the Kuwaiti financial sector continued to impact the market negatively.

Qatar fell by 3.8% in October reducing its year to date gains to 3.6%. The market's fall was mainly impacted by weak earnings announcements and the sell-off experienced in global and regional markets during the last week of the month. 17 of the top 30 listed companies reported a decline in Q3 09 net profits compared to Q2 09.

The Omani market fell by 3.3% in October bringing its year to date gains down to 16.8%. Total earnings by Omani companies, which have reported results, showed a 7.0% growth in Q3 09 compared to the previous quarter which was mainly driven by a 66% quarter on quarter growth in the net profit recorded by Bank Muscat.  To date, 13 of the 27 companies that have announced quarterly results reported a decline in net profits versus Q2 09.

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