JEDDAH, 7 September 2004 — The SHUAA Capital Arab Composite Index (SCACI) recorded a month-to-date gain of 2.10 percent as a result of a 1.90 percent gain recorded by its largest regional constituent, the SHUAA Capital GCC Index, taking its YTD gains to 28.22 percent.
The SHUAA Capital North Africa Index recorded advances of 6.22 percent as a result of strong gains by the Egyptian market; however, the SHUAA Capital Levant Index closed the month down by 1.18 percent, as a result of a 6.72 percent drop by the SHUAA Capital Lebanon Index.
Walid Shihabi, head of research at the Dubai-based SHUAA Capital, said, “Despite specific countries posting strong gains its largest constituent by market capitalization, Saudi Arabia, ended the month marginally up by 0.65 percent, as measured by our SHUAA Capital KSA Index.
Advancers outnumbered decliners 2:1 but a 9 percent drop by Saudi Telecom Company was enough to offset gains.”
The SHUAA Capital UAE Index recorded a 3.35 percent gain in August as lower market liquidity levels prevailed following the IPO (Initial Public Offering) of Arab Technical Construction Company, which was 74 times oversubscribed.
Amongst the top performers in the MENA region during August were the SHUAA Capital Egypt Index, which recorded a 10 percent gain, and the SHUAA Capital Bahrain Index, which closed up by 9.76 percent. In Bahrain, only two companies ended the month down as some stocks recorded strong gains, carrying the index to its largest month to date gain since inception.
The largest gain, at 20 percent, was recorded by Al-Ahli United Bank, following the announcement of its acquisition of 40 percent of Qatar’s Al-Ahli United Bank. The two largest companies by market capitalization — Bahrain Telecommunications Company and Arab Banking Corporation — advanced 10.44 percent and 11.92 percent, respectively. Egyptian cement companies witnessed strong gains with top advancer Torah Cement, recording a 36.44 percent advance.
Large market cap companies such as Orascom Telecom and Orascom Construction Industries also gained 12.54 percent and 23.15 percent respectively, following strong first half results. Large gains in Egypt boosted the SC North Africa Index by 6.22 percent.
The SHUAA Capital Arab Bond Index recorded its largest month-on-month gain this year as Arab credits rolled on board of the recent rally in US treasuries — the result of disappointing US job figures this month — which caught the market by surprise and pushed yields lower. Tunisia and Qatar tightened significantly as renewed appetite in emerging markets was channeled into this part of the region. Generally, performance fell in line with the usual trends except for Bahrain. The market rally this month contradicted general views formed about this market as a result of generally stagnant year-to-date performance, posting gains of 4.54 percent by the end of July.
“Saudi Arabia’s performance was a one-off slow performance purely on the back of the large drop recorded by the largely weighted Saudi Telecom Company. Solidere A and B shares recorded declines of 14.27 percent and 13.58 percent, leading to a large drop of 6.72 percent by the SHUAA Capital Lebanon Index,” said Shihabi.
Bahrain is a stock picker’s environment as was shown by its performance in August. Otherwise, the drop in Saudi Arabia is simply the result of the telecom sector announcements sending a bearish sentiment in the direction of STC.
Lebanon’s performance has simply been a mirror of its largely weighted Solidere stock and having seen large appreciations over the months was simply declining as a result of profit-taking activities and political developments.
Established in 1979, SHUAA Capital is a leading financial investment company licensed by the UAE Central Bank and offers a broad range of financial services and products.