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Arabian Post
06-05-2025
- Business
- Arabian Post
Dubai's Stock Market Outpaces GCC Peers Amid Sectoral Strength
Dubai's equity market emerged as the top performer among Gulf Cooperation Council bourses in April 2025, registering a 4.1% gain driven by robust activity in the real estate and banking sectors. This contrasts with the broader S&P GCC Composite Index, which declined by 1% during the same period, reflecting mixed performances across the region amid fluctuating oil prices and global trade uncertainties. The banking sector played a pivotal role in Dubai's market ascent. Dubai Islamic Bank , the largest Sharia-compliant lender in the UAE, reported an 8% year-on-year increase in net profit for the first quarter of 2025. This growth was underpinned by a 7% rise in net financing and sukuk investments, reaching AED 212 billion. DIB's asset quality improved significantly, with impairment charges dropping by 71% to AED 407 million and the non-performing financing ratio decreasing to 4%. The bank's shares responded positively, posting a 5.4% gain in April. In the real estate sector, Emaar Properties experienced a 1.5% decline in its stock price, contributing to a 0.4% dip in Dubai's main index on April 30. Despite this, the overall monthly performance remained strong, bolstered by gains in other financial institutions. Emirates NBD, for instance, saw its shares rise by 1.2%, reflecting investor confidence in the banking sector's resilience. Abu Dhabi's stock market also recorded positive movement, with its index climbing 1.8% in April. First Abu Dhabi Bank , the UAE's largest lender by assets, exceeded first-quarter profit expectations, reporting a 23% year-on-year increase in net profit to AED 5.13 billion. This performance was driven by a substantial rise in non-interest income, which grew by 22% to AED 3.8 billion. FAB's strategic restructuring, including the appointment of Linos Lekkas as head of investment banking and a reorganisation into four operational divisions, has been positively received by investors, with the bank's shares gaining 8.7% over the month. See also Dubai Residential Reit IPO Marks Key Moment for Property Market Qatar's equity markets posted a 2.2% growth in April, supported by a 1.4% increase in Qatar Islamic Bank shares. However, the broader market sentiment was tempered by declines in other sectors, such as a drop in Qatar Gas Transport's stock ahead of its earnings report. In contrast, Saudi Arabia's main index experienced a slight decline of 0.1% on April 30, influenced by falling oil prices and weaker corporate earnings. Saudi Aramco's shares fell by 0.6%, while Americana Restaurants International saw a 2.2% decrease following a drop in quarterly profits. Alinma Bank's stock also declined by 1.2% due to a sequential drop in quarterly profits.
Muscat Daily
05-02-2025
- Business
- Muscat Daily
GCC MACRO & MARKETS
By M.R. Raghu, CEO of Marmore MENA Intelligence January 2025 clearly belonged to Kuwait, as the Kuwait All Share Index rose by 5.7%, compared to the S&P GCC Composite Index, which increased by 3.0%. Several factors are driving Kuwait's markets, including optimism surrounding the new government and its focus on project spending. There has also been some movement at the stock-specific level, notably involving Gulf Bank's proposed merger with Boubyan Bank, which was subsequently cancelled. Kuwait's banking system, like those of Saudi Arabia or Qatar, hosts only a handful of banks, dominated by Kuwait Finance House (KFH) and the National Bank of Kuwait (NBK). Among the stocks listed in Kuwait, these two account for 46% of the total market capitalisation. This creates a highly fragmented structure, where other banks can achieve reasonable scale only through mergers. This trend is likely to be observed in the other markets mentioned above as businesses evolve. Merger considerations will also revolve around Islamic banking, which has proven to be more profitable with the increasing market size. When mid-sized and smaller banks merge, it will shrink the overall number of players to just a few (from a handful). Saudi Arabia has also made a strong start to 2025, with a month-to-date (MTD) and year-to-date (YTD) gain of 3.1%, followed by Abu Dhabi at 1.8% and Dubai at 0.4%. In my earlier report, I argued for better storytelling of the GCC to Emerging Market (EM) fund managers to attract active managers to the region. There are various ways to do this, and one approach is to showcase the metrics of GCC stocks present in the MSCI EM index and compare them to non-GCC stocks within the same index. For example, liquidity, as measured by the stock turnover ratio for non-GCC stocks in the EM index, was 1.26, compared to 0.61 for GCC stocks (present in the EM index). Some countries within the EM index, such as China, enjoy a turnover ratio of 4.5! It is true that liquidity improves once investor interest increases, but it can also play out counterintuitively, where investor interest can be contingent on liquidity being available in traded stocks. GCC stocks perform better from a dividend yield perspective, with GCC stocks in the EM index enjoying a dividend yield of 3.36%, while the same for non-GCC EM stocks stood at 2.69%. Interestingly, India has a dividend yield of only 1.14%, while Brazil tops the list with 5.17%. On the return parameter, the overall return-on-equity (RoE) of GCC stocks, at 16.42%, is marginally higher than 15.71% for non-GCC stocks. Trump has formally assumed office, and the Middle East is watching on many fronts, including geopolitics, investments, and oil prices. Trump is advocating for lower oil prices (currently trading at $76.8 per barrel) and higher inward investments from the GCC, especially Saudi Arabia. Both of these factors are negative for the region. Saudi Arabia has pledged $600bn of investment in the US over the next few years, while Trump is pushing for $1tn! Trump's lack of interest in climate change and renewables may benefit the fossil fuel industry, but he is also encouraging US oil producers to increase output in an effort to reduce oil prices. If this trajectory holds, the region may need to brace for more fiscal deficits, likely resulting in higher sovereign bond issuances. S&P Global expects global sukuk issuances to reach about $190bn to $200bn in 2025, with foreign currency-denominated issuances contributing roughly $70bn to $80bn. The GCC is projected to account for the lion's share of these issuances. Given Trump's trade rhetoric, which is likely to keep the US dollar strong, the yields offered by GCC issuances could be attractive to foreign investors looking to avoid emerging market currency risks. Most GCC countries' currencies are pegged to the US dollar. Finally, a word about the ongoing DeepSeek saga and its likely impact on energy demand. I have written a longer piece on DeepSeek in my other newsletter, which focuses on the global economy. However, in this newsletter, I would like to assess the impact of the DeepSeek saga from an energy demand perspective. Energy use by AI-based applications has become a significant driver of energy demand, as AI initiatives are highly energy-intensive (like Bitcoin mining). Data centres that employ thousands of computers with high-end chips must run models on a vast scale and 'train' the models to perform their intended tasks. In this process, the estimated energy consumption can be as large as the energy use of an entire city! Hence, we can see that energy consumption is a key assumption in this AI landscape. However, DeepSeek has questioned that assumption, claiming to have developed a foundational AI model that uses a fraction of the energy. If that is the case, the actual energy use for developing AI models may not be as high as previously assumed. This would affect a range of industries, including utilities, power plant operators, uranium producers, natural gas pipeline operators, cooling system operators, and nuclear power. It could also be argued that higher efficiency will lead to greater AI model usage, which may ultimately be energy accretive.
