Mubasher: GCC equity markets got a boost in the monthly trading activity as investor sentiments improved, especially towards the end of the month, Kamco Research said in its GCC Markets Monthly Report.
The positive sentiment was also reflected in the MSCI GCC Index that surged 3.2%.
Total value traded in the region increased by 41.4% to $22.5 billion primarily on the back of a $6.4 billion or 57% increase in value traded in Saudi Arabia further supported by higher trading activity on Boursa Kuwait and the UAE.
The successful debut sovereign bond sale by Saudi Arabia valued at $17.5 billion was a turning point for the market giving higher confidence in the ambitious reforms announced earlier this year.
The bond sale also highlighted international investors’ hunt for higher yields amidst negative yields as seen in the case of some developed market sovereign bonds.
On the sectoral front, the uncertainty surrounding the health of the GCC banking sector got some clarity with the Q3-16 results reported by listed banks in the region, the report indicated.
Although, quarterly earnings declined for banks that declared their results by the end of October-16 by close to 3%, the decline was much milder than expected. Moreover, Abu Dhabi (11 banks) and Kuwait (3 banks) reported higher earnings for the quarter.
In Saudi Arabia, particularly, the bond sale has added liquidity in the market, making it easier for construction firms to make their loan repayment, which in turn eases the pressure on NPLs.
Further support came from the oil market with prices up by almost 5% during the month led by the ongoing talks on limiting productions by oil producing nations. We expect investor sentiment to show broad based improvement in all the major markets in the GCC, resulting in further gains by the end of the year.
This would involve selective stock picking especially of fundamentally strong large-cap stocks in key sectors like Banking and Construction, along with significantly oversold and undervalued companies.
