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.”
