GCC markets monthly report

GCC equity markets saw one of the steepest monthly declines in November-14 as bearish sentiments continued for the second consecutive month led by sharp decline in oil prices. Although the first half of the month was positive for most of the GCC markets led by positive datapoints from global
economies, markets failed to keep the momentum after oil prices declined to four-year low levels at sub-USD 70/barrel.
OPEC’s decision of not cutting oil production taken on the last trading session of November-14 hammered markets across the GCC resulting in a single day decline in excess of 4% for most of the GCC equity markets. Investors expressed concerns on the economic growth prospects of the region as oil prices have declined drastically from the highs of USD 110 per barrel to the current sub-70’s level. However, we do not expect Saudi Arabia or other GCC countries will reduce their expenditure program though the breakeven oil price for some countries is north of USD 100 per barrel.
Trading activity increased on the back of selling pressure as the value of shares traded on the GCC exchanges increased by 16.2% to reach USD 55.1 Bn as compared to USD 47.4 Bn in the previous month.
Total market capitalization of GCC exchanges reached USD 1.1 Tln by the end of the month.
The decline during the month also affected YTD-14 returns of GCC markets with Dubai’s YTD-14 return now recorded at 27.1% and Saudi Arabia down from 17.6% in the previous month to merely 1% by the end of November-14. In Kuwait, the divergernce between the Price Index and the Weighted index further widened as KSE Price index reported YTD-14 loss of 10.6% as compared to a marginal YTD-14 gain of 0.4% for the weighted index, indicating that investors selling pressure is more on small-cap stocks.