A recent investment report by Al Masah Capital (AMC), an alternative asset management and advisory firm focusing on the MENA region, said the UAE economy is "cruising along" while others in the region struggle to maintain growth, and it also noted that Dubai is growing at a faster rate than Abu Dhabi amid the new reality of low oil prices.
This report assessed the economic sector of the major countries in the MENA region in the third week of July.
“We utilized primary news providers and statistical sources like Reuters and Bloomberg while performing our own analysis to build views and expectations relating to the economy and markets,” Shailesh Dash, entrepreneur and founder of Al Masah Capital, told the Gulf News Journal.
Dubai made gains over the week, rising by 2 percent on the back of Emaar, Air Arabia, Dubai Parks & Resorts and Aramex having strong weekly price performance, while Emirates NBD beat earnings expectations modestly by 6 percent and rose by 1.4 percent for the week.
Abu Dhabi was flattish increasing by just 0.3 percent for the week with Abu Dhabi Commercial Bank (ADCB) reporting strong earnings coming in 12.8 percent above estimates, giving the stock reason to rise by 3.6 percent for the week.
Over the week ending July 21, Saudi Arabia’s market was down by 0.9 percent, driven to a large extent by a majority of companies reporting Q2 earnings below market expectations. However, Saudi Arabia Mining Co, Saudi Hollandi Bank, Saudi Electricity, Dar Al Arkan Real Estate, Saudi Ceramic and Yamama Cement all significantly surprised the market with their quarterly earnings releases. On a positive note, Al Marai, and Yanbu National Petrochemical Co beat analyst estimates by 19 and 66 percent respectively.
“Saudi Arabia’s main trigger is the price of oil, and its downward trend is affecting its economy and consequently operating companies in the KSA,” Dash said. “The petrochemical industry suffers directly from a weaker oil price as well as the banking sector as it slows the quantity of funds flowing into banks and the ability to make loans is restricted to some extent. This reverberates throughout the country and economic landscape, hindering economic progress relative to when the oil price was near $100 a barrel.”
As for Egypt, since the end of June, the market has witnessed a pick-up, growing by more than 10 percent, driven by rumors of further currency devaluation. However, the study period saw the stock market decline by 1.9 percent with Ezz Steel reporting Q2 Earning Per Share (EPS) in the red.
Qatar ended the week higher by 1 percent on the back of high earnings releases, namely Qatar Islamic Bank, Doha Bank and Gulf Warehousing Co, which each beat consensus earnings estimates by double-digit figures.
Kuwait was flat for the week with not much action.
“Investment in the region has promising prospects over the long run as the region is fertile ground for progress and development with each market having its own drivers and promising stories,” Dash said. “Saudi Arabia is on track with its 2030 plans, the UAE is continuing its development story and progressing well as it prepares for Expo 2020 and Egypt is moving in the right direction with devaluing its currency and attracting more investors.”
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