Equity Funds in GCC Rise 21pc in First Half

DUBAI — Equity funds registered for sale in member countries of the GCC moved into positive territory for the first half of 2009, recording an average increase of 21 per cent over the same period last year, a Lipper report said.

By Abdul Basit

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Published: Mon 24 Aug 2009, 11:44 PM

Last updated: Thu 2 Apr 2015, 3:46 AM

The GCC Fund Market Insight Report that Lipper, a fund research and analysis firm, issued on Sunday said equity funds registered in the GCC posted a 30 per cent increase in their average returns for the second quarter in comparison with the same quarter of 2008.

Compared with a 12.5 per cent loss for GCC-registered equity funds in the first half of 2008, almost all Lipper equity categories finished the first half of this year with gains. Emerging markets such as Russia and Indonesia and utility funds gained 70.8 per cent, 60.2 per cent and 59.0 per cent, respectively.

“GCC markets outperformed developed markets but underperformed other emerging markets. News at corporate level, the disclosures of payment defaults by Saad Group and Ahmad Hamad Algosaibi & Bros, and at macro-economic level, confirmation of a lighter GCC monetary council, contributed to accrued uncertainties in the market,” said Dunny Moonesawmy, Lipper’s Head of Research for the Middle East.

“However, the market should stabilise itself with the acceleration of government spending programmes, which should benefit the whole region,” he said in the report.

GCC-domiciled funds revealed similar results, with funds invested in emerging markets and sector-based funds, such as information technology and natural resources leading the way.

However, Islamic funds registered for sale in the GCC underperformed their conventional peers during the first half of 2009, gaining only 4.68 per cent—some 11.35 percentage points behind conventional funds, which returned 16 per cent.

Equity was the best-performing asset class, gaining almost 10 per cent due mainly to the robust results from Emerging Markets Global and Emerging Markets Asia funds, which both increased by over 40 per cent, Lipper said.

Real estate funds lost 6.62 per cent, and money market funds shed 1.69 per cent. Kuwaiti money market funds suffered an average 11.11 per cent decline, mainly due to the depreciation of the Kuwaiti Dinar against the US dollar.

The five Lipper Islamic Indices confirmed these trends, with the Islamic Equity Funds Index headlining with an improved return of 11.4 per cent to the end of the first half.

Rebounding in line with improving market conditions, bond funds were up 10.4 per cent over the second quarter and registered a 6.7 per cent rise year to date. This compared favourably with the first quarter of 2009, which witnessed a negative performance of 3.4 per cent.


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