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MENA equities surge in October

DUBAI — October was a spectacular month for the MENA equity markets as five of the 11 regional equity markets recorded gains of over 10 per cent.

Positive corporate earnings news, record high oil prices, improved sentiment towards emerging markets by global investors and the 0.25 per cent reduction in interest rates by the US Federal Reserve Bank (Fed) all complemented each other to make this one of the bet months for global equity markets, Khaled Al Masri, executive partner of Dubai-based Rasmala Investments said in a report.

The attractiveness of regional equities increased with the growth and quality of earnings announced by regional companies across the MENA markets. The result was that foreign institutional investors lined up to buy stocks across MENA markets with the UAE, Qatar and Egypt benefiting the most from the inflow of huge piles of cash. UAE markets were the star performers over the month with a 19.3 per cent return on the UAE General Index during October. The Omani market's 15.2 per cent return for the month took its 2007 performance to close to 45 per cent, therefore making it the best performing regional market for 2007, Al Masri said. Other points he noted are set out below.

Saudi Arabia

Saudi equities gained upwards of 10 per cent as 2.58 billion shares exchanged hands during the month's trade. Over the last four months, Saudi equities gained upwards of 23 per cent as the market recovered strongly from its depressed state in the first-half of the year. Price earnings multiples expanded by a similar percentage and sit at about 17 times earnings, and with lower interest rates.

UAE - DFM

The DFM reversed its recent poor performance with a remarkable 25 per cent gain making it the best performing market in the region for the month. Trading volumes over the month increased by 173 per cent as foreign institutional investors pumped cash into the market. Retail investors joined in during the latter part of the month pushing trading volumes even higher. Market performance as a whole was kept in check by heavyweight Emaar whose 21 per cent gain for the month was lower than most other blue chips as its earnings results were relatively disappointing.

UAE - ADSM

The Abu Dhabi market also showed stellar performance during the month registering strong gains of 20 per cent for the month. The market traded higher throughout the month with increased momentum during the second-half. Trading volumes in the market shot up by 375 per cent as more than 9 billion shares changed hands during the month's trade. Fresh buying from foreign institutional investors during the earlier part of the month enticed retail investors back to the market, further fuelling the rally. The market price-to-earnings multiple moved up to around 15 times from 13 times.

Kuwait

The Kuwaiti market's remarkable eight-month winning streak came to an end in October as the market lost a modest 0.6 per cent over the month. The market traded positively during the first-half of the month but then lost around 3.1 per cent from the peak of the month to the close, as traders felt that the third quarterly results did not complement the recent strong moves in the market. Current multiples are around 14 times earnings.

Qatar

Qatari equities continued their recent strong performance with gains of over 16 per cent in October, thus taking its 2007 returns to 32 per cent. Trading volume increased by over 118 per cent as 66.59 million shares changed hands during the month with regional and foreign investors increasing their presence in this market. Trading was within in a positive narrow range for the first part of the month, with the rally gaining strength following the announcement of third quarter corporate earnings.