Muscat: The GCC stock market lost momentum, amidst concerns of overvaluations among blue-chip companies that nudged investors into profit booking, according to Kuwait Financial Centre's (Markaz) latest report.
The S&P GCC Index is down nearly 0.4 per cent for the month, trimming down the return for the year to 8.7 per cent, Markaz said in its recently released Monthly Markets Review report for May.
"The negative returns can be attributed to the Dubai, Oman and Qatar indices, which ended the month down by 3.3 per cent, 2.6 per cent and 2.5 per cent, respectively. In contrast, the Boursa Kuwait main index and the Bahrain index ended the month higher by 0.9 per cent and 0.6 per cent respectively. MSCI world index remained flat for the year, while MSCI emerging market index displayed a bearish trend, falling by 3.8 per cent for the month," the report said.
Qatar Islamic Bank and Qatar National Bank (QNB) were the top gainers amongst the blue chips companies in the GCC for the month, surging 7.3 per cent and 5.1 per cent respectively. The heavyweight, QNB, also reached the highest price since January 2015. It is worth noting that QNB’s profits rose 7 per cent in the first quarter of 2018 from 0.88 billion in the first quarter of 2017. The share price of Sabic and Saudi telecom, the two largest companies in Saudi Arabia based on market cap, rose 13.85 per cent and 7.1 per cent respectively, driven by a growth in profits.
The Markaz report said as the macroeconomic scenario improves with new regulations in place, changes in consumer behaviour and demographics, mergers and acquisitions could be a key source of value addition both at the operational and strategic levels. This is evident from the merger between Emirates NBD and Turkey's Denizbank. SABB and Alawwal also closed in to complete the $5 billion deal that will create the third largest bank in Saudi Arabia. The deal will mark the first major banking tie-up in the Kingdom in two decades since Saudi American Bank merged with United Saudi Bank in 1999. The merged entity will have assets of around $77 billion and is expected to strengthen the banking system in Saudi Arabia.
The UAE cabinet approved 100 per cent ownership of UAE-based businesses by foreign investors by the year-end. Real estate industry shares in particular may get a boost from full foreign ownership in companies, as the government seeks to attract investment.