Muscat: Gulf Cooperation Council (GCC) stock markets broke their three-month losing streak, aided by gains in Saudi and Kuwait equities, a new report shows.
Optimism surrounding Saudi Aramco IPO, Morgan Stanley’s 'overweight' recommendation on Kuwait equities ahead of its upgrade to emerging markets and a potential trade truce between US and China helped GCC equities to end the month of November on a positive note, according to Kuwait Financial Centre (Markaz) recently released report.
Regionally, the S&P GCC composite index gained by 1.3 per cent for the month with four of the seven markets posting gains. Kuwait was the best performer in November, followed by Oman and Saudi Arabia, whose indices increased by 1.6 per cent and 1.5 per cent respectively.
Abu Dhabi, Dubai and Qatar ended November in negative territory, with their indices decreasing by 1.5 per cent, 2.5 per cent, 0.4 per cent respectively.
The long-awaited Saudi Aramco initial public offering (IPO) picked up the pace with Saudi Arabia announcing the start of IPO process and appointing banks for its book building process earlier last month. The final price would be announced on December 5, 2019.
Due to the sheer size of the listing and its importance in moving Saudi Arabia towards a non-oil economy, there has been a general optimism around Saudi markets. However, the gains in emerging GCC markets were truncated towards the close of the month due to MSCI’s rebalancing of its emerging market (EM) indices. This led to passive funds outflow, in turn, causing a slide in GCC markets, particularly Saudi Arabia.
Markaz report also stated that among the GCC Blue Chip companies excluding Kuwait, National Commercial Bank was the top gainer for the month with its stock price rising by 5.7 5th. Mesaieed Petrochemical Holding Co. ranked second among gainers posting a 4.0 5th increase.
The performance of Global equity markets was largely positive with the MSCI World Index gaining 2.6 5th for the month. US equities (S&P 500) extended its gains with a rise of 3.4 5th in November.
Announcements from the US and China that they are close to reaching agreement on the first phase of the trade deal and that expectations that it would remove threats of further trade war invoked positivity in equity markets.
The UK market (FTSE 100 index) closed1.4 5th higher during November, as investors expect the UK elections to provide a definitive resolution to Brexit. Emerging markets ended the month in negative, with the MSCI EM posting a monthly loss of 0.2 5th.
Oil markets closed at $62.4 per barrel at the end of November, which is 3.6 5th higher than October. Signs of progress in US-China trade deal and the expectation that the Organisation of Petroleum Exporting Countries (Opec) would continue to maintain production cuts contributed to the increase in oil price while limiting volatility. Oil’s gain comes despite Opec’s projection of lower oil demand in 2020 and the observation that rivals were pumping more despite a smaller surplus of crude in the global market.