Sell in May: UAE bourses' market cap drops Dh27.5bn

The combined market capitalisation of UAE bourses shrank 3.46 per cent, or $7.5 billion (Dh27.5 billion), to $208.8 billion (Dh766.3 billion) in May as compared to the previous month.

The market cap of Dubai Financial Market and Abu Dhabi Securities Exchange stood at $216.3 billion (Dh793.8 billion) in April 2015, according to Global Investment House figures.

Dubai bourse’s market cap slid 5 per cent to $95bn and Abu Dhabi declined 2.2 per cent to $113.8bn in May, the Kuwaiti investment bank said in its GCC monthly update.

Combined market capitalisation of GCC bourses declined 2 per cent month-on-month to $1.1 trillion in May 2015. Market capitalisation of all indices except Oman dropped during the month.

Saudi Arabia was the largest contributor ($590.5bn, or 53 per cent) to the total value, followed by Qatar ($176.7bn or 15.9 per cent). Abu Dhabi and Dubai together contributed $208.8bn or 18.7 per cent while Kuwait, Oman, and Bahrain together contributed $137.6bn.

Trading volumes on UAE bourses increased from 6,232 million in April to 11,494 million in May while the total trading value fell from $8.82bn in April to $5bn last month.

Overall, trading in GCC markets was mixed in May 2015. The volume traded grew 9.6 per cent month-on-month as Bahrain, Qatar, and UAE recorded gains. The value traded fell 18.6 per cent amid a drop in the value traded in Kuwait, Oman, Saudi Arabia, and the UAE.

“GCC markets were broadly lower in May as fluctuation in oil price and political unrest in Yemen has shaken investor sentiments. We expect GCC economies to remain positive in the longer run, supported by stable growth in infrastructure spending as well as diversification into the non-oil sector,” Global analysts said.

In terms of valuation, the Price/Earnings ratio of GCC markets stands at 8.7-20.3x, broadly lower than its key emerging market peers, the investment bank analysts said, adding that as large GCC markets, such as the UAE and Qatar, are a part of the MSCI Emerging Markets Index, with KSA to be included in 2017, growth outlook for the stock market is positive.

GCC markets are expected to maintain their spending in the long term; this would fuel growth and, in turn, positively impact the stock markets.

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