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Geopolitical conflicts weigh on GCC market sentiment in October

All markets ended in the red last month, data show

Published: Wed 1 Nov 2023, 7:10 PM

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The DFM General Index declined by 6.9 per cent during the month to close at 3,877.08 points. — KT file

The DFM General Index declined by 6.9 per cent during the month to close at 3,877.08 points. — KT file

GCC equity markets dropped for the third straight month as the war on Gaza raged on and resulted in investors curtailing exposure to the region, data showed.

Trading reports for the region showed foreigners were net sellers in GCC markets, indicating fears of geopolitical instability spreading to the larger region. The decline was broad-based in the GCC with all markets in the red during October 2023.

According to figures from Kamco Invest, Qatar was the biggest decliner during the month with a fall of 7.1 per cent followed by Dubai and Kuwait with declines of 6.9 per cent and 5.2 per cent, respectively. The declines were also reflected in the aggregate MSCI GCC index that declined by 4.4 per cent during the month, the biggest decline in eight months. The fall also pushed the YTD-2023 decline deeper into the red at 7.2 per cent, reflecting declines in four out of seven exchanges.

Dubai, Bahrain and Saudi Arabia continued to stay into the green in terms of YTD-2023 performance, while Qatar and Kuwait recorded double-digit declines.

In terms of monthly sector performance in the GCC, almost all sectors were in the red barring healthcare, which witnessed a marginal gain. The pharma & biotech index recorded the biggest decline at 15.9 per cent followed by consumer durable & apparel and real estate also with double-digit declines of 13.6 per cent and 10.1 per cent, respectively. The decline in the GCC real estate index reflected the fall in most large-cap names in the region as high interest rates affected lending in the sector, in addition to geopolitical issues.

Global equity markets also showed weakness with almost all key markets in the red following hawkish tone from central banks. This indicated higher for longer interest rates that could affect economic growth globally. The MSCI World index also declined for the third consecutive month by 3.0 per cent in October 2023 highlighting a broad-based decline across the globe.

In Abu Dhabi, the FTSE ADX index dropped 4.5 per cent in October, closing the month at 9,343.88 points, further deteriorating the year to date performance of the index that now shows a decline of 8.5 per cent. In terms of sectoral indices, all the ten sectors on the exchange recorded declines during the month. The Utilities index posted the biggest decline among the sectors after Abu Dhabi National Energy Co, the only constituent in the sector, fell 13.7 per cent . The Real Estate index followed with a 9.6 per cent monthly decline to close the month at 7,929.1 points. Three out of the five companies in the Real Estate sector posted monthly declines led by the 9.7 per cent share drop of Aldar Properties Co during the month. In terms of monthly stock performance, Commercial Bank International topped the monthly gainers chart with a gain of 24.6 per cent followed by Bank of Sharjah and Waha Capital which recorded gains of 22.6 per cent and 14.5 per cent, respectively.

Trading activity was mixed on the exchange during October recording a decline in September. Total volume of shares traded declined by 4 per cent in October-2023 to reach 3.4 billion shares as compared to 3.5 billion shares in September.

On the other hand, total value of traded recorded a marginal increase of 1 per cent to reach Dh19.8 billion. Shuaa Capital topped the list of the most active stocks table during the month with 818.5 million traded shares followed by Multiply Group and Aldar Properties which traded 572.2 million shares and 258.1 million shares, respectively. In terms of value traded, IHC topped the table for the ninth month in a row with Dh4.9 billion worth of shares changing hands during the month followed by Alpha Dhabi Holding and Multiply Group at Dh2.5 billion and Dh2.1 billion, respectively.

In Dubai, the DFM General Index recorded the second-biggest decline in the GCC last month. The benchmark declined by 6.9 per cent during the month to close at 3,877.08 points, also recording the first decline after six consecutive months of gains since April. Monthly index performance was skewed towards the decliners after six out of eight indices witnessed declines, while the remaining two indices saw gains that partially offset the overall fall during the month. The consumer staples index witnessed the biggest monthly decline registering an 18.6 per cent decline to close the month at 112.5 points mainly driven by 10.3 per cent slide in shares of Emirates Refreshments Co.

According to monthly stock performance from Bloomberg, Aramex topped the monthly gainers table with 7.4 per cent increase in share price followed by Mashreq Bank and National Cement Company with gains of 5.3 per cent and 5.2 per cent, respectively.

Trading activity on the exchange witnessed a strong growth during October. Total volume traded jumped 67.9 per cent to reach 4.4 billion shares as compared to 2.6 billion shares in September. The total value of shares traded during the month increased at a relatively smaller pace of 4.8 per cent to reach Dh9.9 billion in October-2023 as compared to Dh9.4 billion during September. Union Properties topped the monthly volumes traded chart for the fourth month running recording 875.5 million shares which changed hands during the month followed by Shuaa Capital and Emaar Properties which saw 820.5 million and 465.7 million of their shares change hands during the month, respectively.

On the monthly value traded chart, Emaar Properties topped the list with Dh3.4 billion worth of shares changing hands during the month, followed by Emirates NBD, and Gulf Navigation Holding which saw Dh1.1 billion and Dh911.2 million value of their shares traded, respectively.



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