ZAWYA: Gulf stock markets soar in first quarter

zawya-logoMENA stock markets continued to rally in the first quarter of the year and the region’s IPO market is expected to pick up.

Middle East stock markets continued to perform strongly in the first quarter of the year, led by Dubai and Egypt. The markets built on strong performance in the last quarter of 2013, with most posting double-digit gains and some hitting five-year highs.

The Dubai Financial Market index rose 32% in the first three months of 2014, after surging 22% in the fourth quarter last year, on continued expectations of growth in the real estate, tourism and services sectors leading up to the World Expo 2020.

The Qatar Exchange index was up 12% and the Saudi Tadawul index rose 11% in the first three months of 2014, according to Zawya data.

Egyptian stock markets realised steady growth, with investors seeming to react positively to a military-sponsored political road map aimed at returning the country to stability. The Egyptian stock exchange index increased by 15%.

Kuwait remained subdued with a gain of less than 1%, while Bahrain fared better at 8.7%.

The first quarter of the year witnessed optimism and liquidity in the MENA markets, especially with continued reform of the regulatory environment.

Zawaya box1Saudi Arabia is inching towards opening up the region’s largest and most liquid market to foreign investors, who only have access through equity swaps, mutual funds and exchange-traded funds.

The Egypt market witnessed high confidence in its equities, and new regulations have been placed to encourage real estate and index fund investments. Qatar and the UAE are implementing regulatory reforms in the wake of their MSCI upgrade to emerging markets, effective June 2014.

Sharia-compliant funds are still enjoying healthy returns and attracting more investors. Three out of the six funds launched in the first quarter were Islamic funds.

Equities remained the preferred asset class for the period. The first quarter of the year witnessed six fund launches, four of which were equity funds. The remaining two were a money market fund and a fixed income fund.

The MENA IPO market recorded slow activity in the first quarter, with four offerings that raised a total of $378 million, a decrease from the previous quarter which saw total capital of $1.3 billion raised by eight IPOs.

On the other hand, two secondary offerings managed to raise a combined $288 million in the first quarter of this year. 

The month of March witnessed the busiest activity, with two IPOs valued at $300 million, representing 79% of total capital raised during this period. 

Further activity is expected from the region’s IPO market, with as many as four public offerings due to take place before the end of the second quarter.

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Compiled by the Zawya team of analysts

©2014 funds europe

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