Spring 2015

ZAWYA: MENA markets diverge due to oil

Zawya logoThe fall in the oil price hurt stock exchanges in the Gulf and allowed North African markets such as Egypt to be the best performers. Middle East stock markets were shaken by plunging crude oil prices in the latter half of 2014, but most key markets still managed to retain some gains. Egypt’s stock exchange emerged as the best performer, ending 2014 up 31.6% as greater political stability and steps to revitalise the economy boosted investor sentiment. Qatar led Gulf bourses with an increase of 18.4%, while Dubai closed the year up nearly 12% despite losing a quarter of its value in the fourth quarter. Zawya table2The sudden drop in oil prices took the shine off solid performances in the first half of 2014, which had been fuelled by strong economic fundamentals and good corporate earnings in the Gulf as well as the upgrade of Qatar and the UAE to emerging markets by index provider MSCI. The fall in crude prices to more than five-year lows led to a global pullout from emerging markets and triggered sell-offs by local retail investors, particularly on the Dubai market. Saudi Arabia, the region’s largest market, ended the year in negative territory, down 2.4% after its stock exchange fell 23% in the fourth quarter. The government’s plans to increase spending in 2015 despite lower oil revenues, and its plans to open the Saudi market to direct foreign investment in the first half of 2015, helped support the market. SAUDI IPOS
The final quarter of 2014 saw one of the biggest ever share sales in the Middle East, by Saudi Arabia’s largest lender. National Commercial Bank raised almost $6 billion by selling 500 million shares. The offering accounted for 80% of the total $7.4 billion raised from six initial public offerings (IPOs) in the fourth quarter. In contrast, IPOs raised a combined $1.7 billion in the third quarter. Investor appetite was strong, with the average subscription reaching 23.5 shares in the fourth quarter versus only 4.8 in the same quarter a year earlier.  As for rights issues, there were 12 capital increases in the fourth quarter of 2014, which raised a combined $2.3 billion, more than six times the capital raised in the third quarter. One of the largest deals came from Saudi Arabian Mining, which raised $1.5 billion by issuing 243 million shares. TOP FUNDS
With Gulf-focused funds hammered by the collapse in the oil price, it was the turn of North African fund managers to lead by performance. Tunisian and Moroccan funds stood out at the end of last year, recording the highest returns in the fourth quarter. Tunisian fund MAC Excellence FCP Fund ranked first with a return of 21.5%, while FCP CEA Maxula scored 9% to come fifth in the region. There was one good Gulf performer – Daman Fifth fund, focused on the Gulf Cooperation Council states, ranked second with a return of 14.4%, while Morocco came third, with Orange Equity Growth cap fund making a return of 12.8%. The Shuaa MENA Conventional Equity Fund came fourth with 12.2%. Equities and bonds were the favourite asset classes for new funds in the final quarter, which saw the launch of six Tunisian funds, three Saudi funds and 11 Moroccan funds. Eight of the new funds invested in equities, eight in bonds, while two new funds invested in money markets and two in mixed assets. Zawya table1 Zawya table3 ©2015 funds global mena

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