UAE's combined market cap rises by Dh2.2bn in September

Combined market capitalisation of the UAE bourses increased by $600 million (Dh2.2 billion) to $204.6bn (Dh750.88bn) in September 2015 as compared to the previous month.

Dubai Financial Market’s month-on-month (MoM) market capitalisation dropped 0.7 per cent to $89 billion – a drop of $600 million – while Abu Dhabi Securities Exchange (ADX) saw its market cap rising 1.1 per cent to $115.6bn in September.

According to Kuwait’s Global Investment House report, Dubai Financial Market (DFM) declined 1.9 per cent MoM in September after an 11.6 per cent MoM fall in August. The index remained volatile throughout the month. Uncertainty over the US Federal Reserve’s interest rate hike decision and weak oil prices continued to weigh on the market throughout the month.

“In September, Indonesia issued the largest ever sovereign issue on the Nasdaq Dubai, valued at Dh22 billion. This reinforced Dubai’s position as the leading hub for Islamic economy in the world. Going forward, the government believes that this would play a significant role in attracting sukuk issuances from around the world,” the Kuwaiti investment bank’s analysts said.

The DFM announced that it is expected to conduct the International Roadshow in October (in co-sponsorship with Bank of America Merrill Lynch). This would enable the companies listed on the DFM to inform the international fund managers about their growth strategies and the recent developments. Furthermore, Network International (NI), a card payment processing company in Dubai, announced that it is considering an initial public offering.

Abu Dhabi’s ADX increased 0.2 per cent MoM in September after falling 7 per cent MoM in August. After a weak start due to the global cues and decline in oil prices, the ADX recovered slightly due to some recovery in oil prices. These gains were followed by some choppy trading as the investors awaited cues related to the US Federal Reserve’s interest rate policy. Also, liquidity levels remained weak before the Eid Al Adha holiday. After the holidays as well, the market sentiment remained weak even as the global markets gained some momentum as the US Federal Reserve Chair, Janet Yellen, announced that she expects the US interest rates to rise before the end of this year.

The ADX announced that it expects a third listing on its secondary market this year. The second market is a trading platform for private companies.

The volume of shares traded increased 30.8 per cent MoM to 2.1bn in September from 1.6bn in August. The value traded rose 23.3 per cent MoM to $1.2bn.
 
GCC markets close broadly in negative in September

GCC markets closed largely in negative territory due to oil price volatility, concerns over China’s economic growth, and uncertainty over the timing of the Fed’s interest rate hike.

Kuwait’s fiscal deficit and continued delisting dampened investor sentiment. Furthermore, Fitch’s decision to lower its outlook for the KSA’s foreign and local currency issuer default ratings to “negative” from “stable” aggravated the concerns.

Trading activity was thin due to Eid holidays. “We expect the outlook for GCC economies to remain positive in the long term, supported by stable growth in infrastructure expenditure and diversification into the non-oil sector. Moreover, local governments are committed to essential developmental activities in order to diversify their economies away from oil.

“Non-oil revenues of most GCC nations increased over the past few years, and the trend is expected to continue in the coming years. With oil prices expected to remain volatile, GCC economies could suffer a setback in the near term. However, the long-term outlook for GCC economies remains stable, as oil dependency is projected to reduce gradually,” the bank’s report said.

In terms of valuation, the one-year forward PE ratio of GCC markets stands at 10.3–13.2x, broadly lower than that of emerging market peers.

Major GCC markets such as the UAE and Qatar are a part of the MSCI Emerging Markets Index. Furthermore, the KSA is likely to be included in the index in 2017. FTSE upgraded Qatar to Secondary Emerging Market from Frontier Market in September 2015.

In light of these developments, the growth outlook for the stock market appears positive, the Kuwaiti investment bank said.

 

Follow Emirates 24|7 on Google News.