Middle East equity markets suffered losses in July: report

August 8th, 2008 - 11:04 am ICT by IANS  

Dubai, Aug 8 (IANS) Apart from the Abu Dhabi Index (ADX), equity markets in the Middle East and North Africa (MENA) region suffered losses in July 2008, under-performing many other global markets, according to a new research report. The report, released by leading regional investment banking firm Rasmala, said that despite leading corporations reporting good profits, all regional equity markets, except ADX, under-performed.

The markets suffered from seasonally low trading volumes, lingering concerns over the Iran nuclear issue, a busy initial public offering (IPO) schedule in Saudi Arabia and the United Arab Emirates (UAE) and profit taking in the previously strong markets of Kuwait and Oman.

“Global equity markets, particularly the United States, recovered some of their poise in July as oil prices corrected lower giving much needed relief to the global economy,” Khaled Al Masri, partner for asset management at Rasmala, said in a statement.

He, however, added that this was a temporary phenomenon as fundamentals and valuations remained compelling.

“The temporary downturn derives in the main from it being a seasonally slow period and domestic investors’ preference to invest in IPOs as opposed to the secondary market.

“Investor sentiment suffered as a number of technical barriers in Oman, Saudi Arabia and Egypt in particular were breached in thin trading volumes.”

The ADX was the star performer over the month and continued to outperform its Dubai peer.

Strong performances by First Gulf Bank and UAE’s leading telecom operator Etisalat, on the back of their impressive second quarter earnings, supported the market while fresh margin positions opened at the beginning of the month provided a further push to the index which touched the psychologically important 5,000 level, said the Rasmala statement.

The region’s largest market, Saudi Arabia’s Tadawul index, suffered the most in July losing over 6.5 percent.

The report predicted that a regulatory or geo-political catalyst is needed for a rebound in momentum and domestic investor sentiment.

The Egyptian market continued to suffer from a host of domestic and international factors and lost a further six percent over the month with year-to-date losses reaching over 12 percent.

The previously resilient Omani and Kuwaiti markets could not resist the weak sentiment and lost five percent and three percent respectively.

The Doha Stock Market ended two percent lower, the research report by the Dubai-headquartered firm said.

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