JEDDAH, 20 June 2005 — The stock markets in the Gulf Cooperation Council (GCC) countries exhibited mixed trends with 4 markets declining and 2 markets reporting a monthly gain in May. The Oman and Saudi Arabian indices notched up strong monthly gains of more than 6.5 percent amid surging trading volumes. However, the bearish trend continued in Qatar as it tumbled down 12.3 percent in the month on the back of a 15.78 percent decline reported in April. The UAE market, though reporting a monthly decline of 5.96 percent in May, continues to lead in terms of YTD growth with reported gains of 83.04 percent.
The debutant stocks in the GCC market have continued to show stellar performances which is evidenced by the strong growth shown by the newly listed scrips of Saudi Dairy and Foodstuff Company (SADAFCO) and Dhofar Power in Oman, according to a report by the Kuwait-based Global Investment House (GIH).
The market capitalization of the GCC region continued to climb with Saudi Arabia’s exceeding the $450 billion mark to reach $462.1 billion at the end of May. However, the UAE & Kuwait market capitalizations declined as a result of the bearish trend. The biggest decline was reported by the Qatar market as it shaved off about $10 billion in market capitalization to end the month at $68.8 billion. The total volume of shares traded on the GCC bourses in May amounted to 7.78 billion valued at $120.6 billion, the GIH report said.
In May the aggregate market depth was negative with 221 stocks declining and 171 stocks reporting a monthly gain. The Qatar market witnessed broad-based selling pressure as only one stock managed to remain in the positive territory. The scene was nearly the opposite in Saudi Arabia where only 7 stocks ended the month in the red.
In 2004, the Omani stock market index reported a yearly growth of only 23.78 percent compared to the UAE which grew by 88.4 percent and Saudi Arabia which registered a growth of 84.9 percent. However, the Oman market reported strong upward momentum in 2005 and registered YTD gain of 48.05 percent in the first five months of the year. MSM market capitalization also breached the psychological $10-billion mark in May.
One of the important developments in 2005 in Oman market has been the listing of top-notch utilities companies such as AES Barka and Dhofar Power and both hogged the limelight when they were listed on the MSM. AES Barka on the first day of trading shot up to RO1.93 as compared to its IPO price of RO0.99 per share. The market was expecting this kind of buying frenzy as the issue was oversubscribed 17 times.
According to the GIH report, the stock market rally is likely to be sustained in the medium term on account of good performance by the corporates/banks coupled with the strong macroeconomic environment.