This is turning out to be a vibrant summer! Although the attached weekly reports focus on last week’s developments, the markets in the Middle East strongly shot up during the weekend. Saudi’s 3% rise on Saturday set the tone for a strong rise in Dubai and Abu Dhabi on Sunday. Volumes weren’t that high but significantly better than of late and local buyers were out in force. The index heavyweights across the board were up above 5% during the weekend. To name a few examples, Emaar +9%, DFM +12%, Arabtec +8%. A few names even traded limit up, amongst them real estate companies Aldar and Sorouh. Egypt also had a strong start for the week on Sunday. Good sentiment has returned, underpinned by the obvious higher oil price and the fact that the global markets are feeling quite better lately.
In the Middle East, the news coming out of the reporting season is clearing of some of the ‘bad debt demons’ that had been haunting the region’s financial industry. Two major Saudi banks increased provisions, Abu Dhabi Islamic bank came out showing that they had exposure to troubled Saad group though outstanding loans, other banks in the region made similar disclosures. Dubai announced a $20 billion credit facility which will serve as commercial lending facility to local companies. Also worth noting is Qatar’s opening up of its mobile telecom market to a new overseas player: Vodaphone. Qatar was also in the news with its role in facilitating the takeover of Porsche by taking a 17% stake in Volkswagen and thus allowing VW to achieve their ambition to incorporate the sports car manufacturer after a 4 year battle.
We often speak about how the African and Middle Eastern region will converge into an increasingly integrated economic block; we saw another clear example of this when Egypt’s El Sewedy Cables established a presence in Nigeria to produce transformers. With regards to Nigeria, we are hopeful that we are now seeing most of the credit concerns in the banking sector being priced in and expect more investors to start taking positions in the embattled sector. Financials should, however, continue to be rather volatile as we still have to get through the turbulence of the reporting season. The South African Rand added another 3.3% to its already impressive recovery.
To access the weekly reports online, please click on take a look at our markets update section.
Comments on this entry are closed.