Muscat: The S&P GCC index took a downturn in the month of November. The index fell 2 per cent for the month, drawing down on the overall gains for the year, which now stand at 7.6 per cent, according to Kuwait Financial Centre's (Markaz) latest report.
This was mainly due to the sharp fall in oil prices, the continued trade war uncertainties and geo-political concerns, Markaz said in its recently released Monthly Markets Review report for November.
The report said that Saudi Arabia, Abu Dhabi and Dubai saw large pullbacks with the Saudi Tadawul index, Abu Dhabi index and the DFM General Index falling 2.6 per cent, 2.7 per cent and 4.2 per cent for the month of November, respectively. Overall, Qatar and Bahrain indices gained 0.6 per cent, and 1.1 per cent respectively, whereas, the Oman and Abu Dhabi index lost 0.2 per cent and 2.7 per cent during the month. Ezdan holdings and Masraf Al Raya were the top two performers among GCC blue chip companies, rising by 16.4 per cent and 5.5 per cent during the month respectively.
The report stated that Kuwait finally broke out of its three-month losing streak and became the best performing market in the GCC region for the month of November. The Kuwait All Share Index gained 1.3 per cent for the month with the YTD returns moving up to 8.4 per cent as investors welcomed the initiatives by Central Bank of Kuwait (CBK) to revive the credit growth and boost consumer spending by increasing the personal loan limit.
The oil market was under intense selling pressure we saw an acceleration in price fall. Record high oil production from the United States and a slowing global demand for the commodity could be cited as reasons for the negative performance.
Opec is preparing to rein its output on expectations that the oil market will be oversupplied next year. Brent crude continued to fall adding to its momentum from last month, with a MTD performance of -22.2 per cent.
Saudi Market continued to be in focus during November as geo-political turbulence and a continued drop in oil prices maintained a grip on the market prices. The proportion of shares held by foreign investors on the Saudi Stock Exchange (Tadawul) has been steadily falling in recent weeks. International shareholders controlled 5.07 per cent of all listed shares on 27 September, but the figure had fallen to 4.71 per cent by early November (Forbes). While, the yield on the Saudi Arabia US$ 5 billion bonds due 2028 climbed to a record 4.6 per cent.
Talks of a retreating trade war has brought back some confidence to the Chinese markets, however, the prolonged uncertainty has already generated significant pressure over the Chinese economy. Steel, real estate, e-commerce and electronics sectors suffered weaker demand during the month of November.
Consumer confidence dropped and the Shanghai all share index lost 0.57 per cent for the month of November. However, the overall emerging markets saw a positive month with global investors increasing their exposure towards the emerging markets.
Talks of a slower pace of US Fed rate hikes and improving fundamentals helped bring back the positive momentum to the emerging markets and the MSCI EM Index gained 4.06 per cent for the month of November.
The US markets have been volatile this month as energy companies were battered due to a free fall in oil prices and a slump in tech stocks, the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks fell by over 20 per cent from their 52-week highs, brought the S&P 500 Index down to its lowest levels in five months. The S&P 500 registered a MTD performance of -1.86 per cent.
The Federal Reserve is still expected to raise interest rates next month and three times next year, but US Fed Vice Chairman Richard Clarida said that there is some evidence the world economy is cooling down and that they would be more cautious moving forward on their pace of increasing interest rates. MSCI World Index gained just 0.96 per cent in November.