GCC Stock Markets 2015 Performance Reflects Emerging Markets Decline

GCC Stock Markets 2015 Performance Reflects Emerging Markets Decline

All GCC stock markets ended 2015 lower than where they started it, in most cases by 14-17%, according to a Market Watch report published on 29 December by SICO, the Bahrain-based investment bank.

According to SICO the Year-to-Date change in the indices on 29 December was as follows:

Bahrain (BAX) -15.7%

Kuwait (KWSE) -14.6%

Oman (MSI) -14.4%

Qatar (DSMI) -15.4%

Saudi Arabia (TASI) -16.8%

UAE (DFM) -16.9

UAE (ADSM) -5.1

With the exception of the ADSM, the declines are in line with broader trends in emerging market stock indices during 2015. For example, the MSCI Emerging Market index fell by 16.3%.

Developed market stock exchanges fared better during 2015, although their performance was uneven. The Dow Jones Industrial Index fell by 1.7% and the FTSE by 4.4%, but the NASDAQ rose by 6.4% and the Nikkei by 8.8%. The Dax rose by 10.3%.

The SICO report also shows changes in 5-year Credit Default Swaps for some GCC sovereigns. Abu Dhabi and Qatar show the tightest spreads, at 84 and 88. Both changed little over the year. Saudi spreads widened to 152 from 66, and Bahraini spreads widened to 362 from 237. In contrast, Dubai CDS tightened marginally to 230 from 237.

The SICO report shows Saudi Arabia petrochemicals giant SABIC as the largest quoted GCC stock, with a market capitalisation at the end of 2015 of $62.4 billion, nearly twice the size of the next three largest: UAE telecom company Etisalat ($37.8 bn), Saudi Telecoms Company ($35.7bn) and Qatar National Bank ($33.8bn).

Eight GCC banks had market capitalisations greater than $10bn at the end of 2015, according to the report:

Qatar National Bank, $33.8 bn

National Commercial Bank, $27.3 bn

Al Rajhi, $22.8 bn

First Gulf Bank, $15.9 bn

National Bank of Kuwait, $14.0 bn

Samba, $12.1 bn

NBAD, $11.4 bn

ENBD, $11 bn.

All except ENBD had price to book ratios in excess of 1.0, and the largest three banks had price to book values in excess of 2.0.

Turnover on the Saudi Stock Exchange totalled $1,853.4 bn in 2015, according to the SICO report. This was eight times the combined turnover of the other four markets: UAE ($139.4bn), Qatar ($54.9 bn), Kuwait ($32.1 bn), Oman ($8.0 bn) and Bahrain (1.1 bn).