Outlook for the Middle East's markets
The Dubai Financial Market General Index has climbed more than any other exchange in the Gulf, rising 21.8 per cent so far this year, with property companies leading the charge. Emaar Properties trounced analysts' estimates for full-year earnings, sparking a 17.9 per cent rise in the bellwether stock. Arabtec, the Gulf's biggest contractor, more than doubled, at one point rising as much as 128.3 per cent compared with the year-end price. The shares sank rapidly after it emerged that Abu Dhabi's Aabar Investments had accumulated a 5.28 per cent stake in the company.
The Abu Dhabi Securities Exchange General Index rallied, gaining 6.2 per cent during the quarter. Large-cap stocks were a mixed bag, with the index's biggest component, Etisalat, falling 2.6 per cent during the first three months of the year. First Gulf Bank, by contrast, soared 25.9 per cent after a dividend payout of Dh1.5 billion (US$408 million). Aldar Properties and Sorouh Real Estate raised some eyebrows when their share prices converged and began moving in lockstep beginning on March 5. A week later the two announced they had begun merger talks with the "blessing" of the Government.
The Saudi Tadawul All-Share Index rose 22 per cent as speculation brewed that the exchange would open to international investors. Daily traded values soared to US$5.75 billion (Dh21.21bn) - the highest level since 2007. The Gulf's largest stock market is accessible to world markets only through an unpopular regime of total return swaps that do not track the underlying securities. Investment banks in Dubai, including Russia's VTB Capital and Japan's Nomura, took steps towards capturing greater quantities of Tadawul trading ahead of the anticipated opening.
In January, the Bahrain All-Share Index fell to its lowest level since its launch in 2004 and has staged only an anaemic recovery. The market measure remains up for the year, registering a gain of 0.7 per cent but nevertheless is off 60.2 per cent from its 2008 peak. Even news of Arcapita's filing for bankruptcy protection did little to move the market, with the index falling only 0.4 per cent after the investment bank, which is unlisted, sought refuge under Chapter 11 of the US Bankruptcy Code.
A poor start to 2012 for Qatar followed a year in which it rode out much of the storm afflicting global markets. The Qatar Exchange had a strong 2011 as investment flowed into the country and companies bid to take advantage of contracts related to preparations for the 2022 Fifa World Cup. The market was alone in the Gulf to end the year registering gains, rising 1.1 per cent. The first quarter of this year, by contrast, was rather more lacklustre, with a dip of 0.1 per cent as concerns grew that the country's banking sector lacked the liquidity to support the US$100bn burst of investment expected.
Oman's sleepy stock exchange ended the year flat. The sultanate's spending plans, estimated at about 5 per cent of GDP, soothed bubbling political discontent that surfaced during the Arab Spring. Markets were roused somewhat by talk of a merger between Oman International Bank and HSBC Oman, which the central bank approved last week. Meanwhile, the country's move to allow Islamic banks was met with excitement, with the central bank saying two initial public offerings of Sharia-compliant lenders under formation could be due in the second quarter.
Egypt's stock market soared amid confidence that political progress was being made as parliamentary elections passed peacefully and the country's new democratically elected legislature sat for the first time. During a year of revolution in 2011, a dwindling away of the country's foreign reserves and flip-flopping over a deal with the IMF, the EGX 30 index lost almost half its value. But the 38.5 per cent rally in the index during the first quarter was the second-strongest in the world, trumped only by Venezuela, as Egypt returned to talks with the IMF.
The Kuwait Stock Exchange rose 6 per cent in the first quarter, performing better than half of the Gulf's bourses. The exchange became a little emptier after 10 companies were delisted in February, following lengthy suspensions from trading for failing to file annual reports. The Kuwait Stock Exchange planned its own listing to make up the numbers but is expected to be pipped to the post by Palestine Securities Exchange - which is expected to follow Dubai Financial Market Company to become the Arab world's second listed bourse.