UAE yields an average total shareholder return of 24% in 2012, exceeding global average of 18%: Boston Consulting Group

Global equity markets took a giant step forward in 2012, generating an average total shareholder return (TSR) of 18 per cent according to a recent study conducted by The Boston Consulting Group (BCG), entitled “Signs of Sustainable Value Creation”.  What’s more, the results reveal intriguing clues suggesting that the global economy may be at the beginning of a more sustainable pathway to longer-term value creation.

BCG analyzed the 2012 TSR of more than 5,000 companies across 40 countries and 37 industry sectors. As one might expect, emerging markets delivered among the highest average TSR—with the big winners in 2012 being Turkey, South Africa, the Philippines, and Thailand. (See Exhibit 1.)

UAE on the rise

The UAE showed remarkable recovery in 2012, with an average TSR of 24 per cent as compared to minus 3 per cent in 2009-2011. UAE’s results outranked countries such as Singapore, Belgium, France, Switzerland, UK, US (S&P), Canada, Brazil, Indonesia, and China.

“The UAE has successfully augmented its aggregate TSR in 2012, as some of the sectors which have previously been negatively affected during recent years (e.g. banks, real estate, construction) have performed very positively in 2012. Additionally, some fundamentals of the economy have shown a positive trend as well,” says Markus Massi, Partner and Managing Director of The Boston Consulting Group Middle East.

“A deeper dive into the UAE’s performance shows that, in 2012, 6 out of the top ten companies by TSR as listed on the Dubai Financial Market came from the real estate and construction sector, underlining the increase in activity in these sectors in Dubai as well as the overall recovery of the Dubai real estate market ,” Markus Massi adds.

National Central Cooling was the Dubai Financial Market Index’s top performer with a TSR of 144 per cent, followed by Dubai Islamic Insurance (119 per cent), Tamweel (97 per cent), Ajman Bank (78 per cent), Gulf General Investment (66 per cent), Deyaar Development (65 per cent), Air Arabia (56 per cent), National Cement (54 per cent), Union Properties (53 per cent) and Emaar Properties (51 per cent).

Other global trends

At least some global companies are finding ways to deliver sustainable TSR and this is reflected in the regional balance of the top-ten large-cap value creators for 2012. In contrast to 2011, when nine out of the top-ten companies were from the U.S., the 2012 list includes companies from the U.S., Germany, Spain, Brazil, and Japan.

Although broad market trends have given some companies on the top-ten list a boost, many have clearly found a way to thrive in the current economic environment—often by leveraging global growth to fight the strong economic headwinds in their local markets.

In terms of the comparative performance of the 37 industrial sectors in the BCG study, sectors that include low-cost consumer-products companies (such as producers of personal goods and beverages) continued to do well in 2012, and hard-hit financial sectors such as insurance and banks enjoyed a rebound.

“But the relatively strong performance of traditional economic engines such as automobiles and parts, household goods and home construction, construction and materials, and general industrials suggests that a broader recovery may be under way,” added Eric Olsen, a senior advisor to BCG and a coauthor of the study.

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