JEDDAH, 9 May 2007 — A majority of regional equity markets had positive returns during April with Qatar being the best performer with its 7.7 percent gain over the month. “It nevertheless remains the worst performing market year-to-date with losses close to nine percent since the beginning of the year,” according to a review of the regional stock market for April released yesterday.
The Saudi Tadawul Index continued its losses from March and was around three percent lower over the month to take its year-to-date losses to 6.4 percent despite a rally in the last week of April as investors were focused on earnings results for the first quarter of 2007.
“As expected, and as compared to the same period of 2006, results from the financial sector were poor but compared to the fourth quarter of 2006, there seems to be some improvement. By contrast, market leader Saudi Basic Industries Corporation (SABIC) announced an increase of 50 percent in net earnings, which supported the stock prices year-to-date gains of over 15 percent making it one of the best performing GCC large cap stocks over the past few months,” said the report prepared by Khaled Al-Masri, executive partner of Rasmala, a regional investment bank, headquartered at the Dubai International Financial Center, with operating subsidiaries in Riyadh and London.
Despite reasonable valuations, the Saudi market continues to be driven by speculator and retail flows but indications are that trading volumes during losing sessions are decreasing, which may be a positive sign for this important market.
After the 11 percent fall in March, the Dubai market started the new month on a weak note and reached its lowest levels for over one year at one point. The market recovered somewhat after the initial weakness and ended the month with gains of around 2.5 percent amid signs of some foreign inflows into the market after prices had reached very attractive levels.
The Abu Dhabi market registered a growth of 5.86 percent during the month.
The Kuwaiti market continued its gains driven by continued excitement in the telecom sector. Oman’s 4.4 percent gain over the month took its year-to-date returns back into positive territory.
Morocco added to its gains of the previous months to be the best performing market of the region with 27.6 percent return year-to-date.
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while the other North African markets of Tunis and Egypt continued their positive returns and outperform their larger GCC peers.
The Egyptian market continued its strong performance gaining 3.1 percent during the month thus increasing its 2007 return to 6.5 percent. The pace of privatization and significant investments in infrastructure are expected to continue in 2007-08 that would give another boost to the capital markets.
The correction in the Jordanian market continued with 2.9 percent losses in the month further eroding the strong gains made in the first two months of the year. The negative trend persisted throughout the month, even Arab Bank announced a 25 percent increase in net profit over 2006, or Jordan Telecom Group announcing the distribution of 85 million Jordanian dinars in cash dividends.
