Regional Stock Markets Mixed Start

The New Year has begun on a mixed note as regional markets reacted differently to the prevailing economic, financial and political variables. Four of the six GCC markets declined, with the UAE and Oman being the notable exceptions, according to executive partner of Rasmala Investments Returns Khaled Al Masri.

Egypt, after a positive start to the year, was affected by a wave of profit taking leading to losses of over four per cent for this market. The smaller North African markets of Morocco and Tunisia continue to make further gains despite valuations having reached overly high levels. The Jordanian market, after a poor 2006, began the year on a very strong note and registered the highest growth among regional markets, noted Al Masri in his overview report for the Middle East.

Trading activity in the first two weeks of the month was light as most investors preferred to stay on the sidelines awaiting corporate earnings results. As the month progressed, more companies declared their financial results and there was a clear improvement in trading activity, he added.

The largest market, Saudi Arabia, began the New Year with a large decline. The Saudi market (TASI Index) dropped more than 11 per cent for the month, after having dropped by more than 50 per cent in 2006.

The fall was broad based with seven of the eight sector indices showing losses and the banking and telecom sectors were the most affected with losses of 15 per cent to 20 per cent, the report revealed.

Profit results of the major companies have largely been in line with market expectations but it would seem that investors had been expecting higher dividend payouts and were worried by signs of weakness in the fourth quarter profits of some leading banks.

Lower oil prices and the on-going worries over Iran and Iraq seem to have affected the Saudi market more than any other market. Investor confidence was further damaged by the regulator's (CMA) decision to suspend two firms, Anaam International Holding Group and Bishah Agriculture Development, after their accumulated losses had wiped out their capital. We see these stringent measures as a welcome development despite their negative short-term impact on the market, the report highlighted.

The large decline for the month has made certain valuations attractive but the market keenly awaits a catalyst to trigger a rebound in investor interest.

UAE markets rose by more than three per cent for the month after a slow start to the year. The generally positive profit news from leading companies and banks has led to a clear improvement in investor sentiment and trading volumes were four to five times higher than they were at the beginning of the year.(TradeArabia News Service)