Gulf markets underperform but future looks brighter

The Dubai share index fell 4.6 percent this year (Reuters)
Updated 31 December 2017
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Gulf markets underperform but future looks brighter

DUBAI: Middle Eastern stock markets far underperformed the rest of the world in 2017 but as the year ended, beaten-down valuations for shares and plans for higher government spending gave investors reason to expect a better 2018.
Egypt’s stock index surged 21.7 percent in 2017 as economic reforms bore fruit, but the picture in the Gulf was little short of disastrous because of geopolitical tensions, sluggish economic growth and sagging real estate prices.
Saudi Arabia’s index edged up just 0.2 percent during the year compared to a 34 percent leap for MSCI’s emerging markets index. Among other major Gulf markets, Dubai fell 4.6 percent and Qatar, hit by a boycott imposed by other Arab states, lost 18.3 percent.
The New Year looks unlikely to be as poor in the Gulf, however, partly because many share valuations have been beaten down to stand in line with, or even below, other emerging markets.
Also, a rise of oil prices in the last few months has let Gulf Cooperation Council governments slow austerity drives that have slashed economic growth and damaged corporate earnings. Growth is widely projected to pick up moderately in 2018.
“With this backdrop and underpinned by undemanding valuations, we are generally optimistic on the GCC for the year 2018, with the outlook ranging from slightly negative to moderately bullish across the board,” said Bader Al-Ghanim, head of GCC asset management at Kuwait’s Global Investment House.
A Reuters poll of 13 leading Middle Eastern asset managers, released on Sunday, found 54 percent expect to raise allocations to regional equities over the next three months and none to cut them, the most positive balance since August.
Saudi Arabia’s index edged down 0.1 percent on Sunday as real estate developer Dar Al Arkan, the most heavily traded stock, sank 5.0 percent despite saying it would offer 30 percent of Dar Al Arkan Properties, a property management firm with assets of SR2.68 billion ($715 million), to the public. It did not specify a date.
The stock had more than doubled in the past three months, partly in anticipation of the IPO.
National Commercial Bank, the biggest bank, climbed 2.7 percent in active trade. Its board proposed increasing the bank’s capital by 10 billion riyals to 30 billion riyals by issuing bonus shares funded from retained earnings.
Qatar’s index edged down 0.03 percent on Sunday as the biggest lender, Qatar National Bank, slipped 0.8 percent.
The year’s final day of trade for markets in Dubai, Abu Dhabi and Kuwait was Thursday.


Dubai economic growth slows in 2017

Updated 5 min 35 sec ago
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Dubai economic growth slows in 2017

  • Economy grows 2.6% in 2017, down from 2.85% the previous year
  • Wholesale and retail trade grew by just 0.9% during the year

Dubai’s economy registered slower growth in 2017, according to official figures, coming in below the government’s official forecast.

The emirate’s GDP grew 2.6 percent to 389 billion dirhams (SR381 billion) in 2017, according to data released on Saturday by the Dubai Statistics Center, compared with 2.85 percent the previous year.
The Dubai Economic Department last year forecast growth of 3.2 percent in 2017, followed by 3.5 percent in 2018.
Wholesale and retail trade — accounting for 26.6 percent of the emirate’s real GDP — grew by just 0.9 percent during the year, even as total imports and re-exports grew by 2.2 percent during 2017.
Growth in total imports and re-exports was attributed to a growth in industrial inputs and capital goods, which contributed to the growth of foreign trade by 1.8 and 1.6 percent respectively, according to the DSC.
“These figures provide solid evidence for the fact that Dubai plays a dynamic role in supporting trade between the region and the rest of the world,” said the DSC’s executive director Arif Al Mehairi. “This growing role has boosted the growth of Dubai’s trading sector.”
Transportation and real estate were among the fastest growing sectors of the economy, improving by 7.3 percent and 4.5 percent respectively during 2017.
The construction sector meanwhile grew by 3.5 percent during the year.
“The Dubai government’s spending on infrastructure projects, which rose by almost 27%, had a pronounced positive impact on the performance of the construction sector in the emirate.” the DSC said.
The IMF last week estimated that the UAE’s economy as a whole grew just 0.5 percent in 2017. The fund estimates this will grow to 2.5 percent in 2018 and 3.2 percent in 2019.