Funds outperform weak GCC markets

Although trading activity improved in the GCC region, all markets, except Kuwait, ended in negative territory, taking cues from international markets. The markets posted losses due to sharp corrections in the share prices of heavyweight companies. Kuwait posted monthly gains of 2.9%.

Though the Qatari and Bahraini stock markets ended the month in the red, the losses were insignificant. Dubai was the weakest GCC market as it lost 4.0% for the month of June. During the month, the benchmark indices, the MSCI GCC Index and MSCI GCC Islamic Index, lost 0.8% and 0.7%, respectively.

Performance of GCC MSCI Stock Indices (June 2008)

June 2008 proved to be a dull month for Gulf bourses with all GCC markets, except Kuwait (2.9%), posting losses. Market performance during the month was largely affected by reduced activity due to ongoing global market turmoil, in addition to profit booking in many GCC markets. Strong markets, such as Qatar and Oman, as well as laggards, like Saudi Arabia, posted losses as structural problems in the U.S. seeped into their economies. While Kuwait was the best performing market for the month as the government came out with record budget spending of KD19.0 Bn, Dubai lost 4.1% in June. The Omani banking sector saw some new regulations to control the overall liquidity in the system. Consequently, the market lost 2.0% in June.

Asset Allocation Trends- GCC Equity Funds (June 2008)

GCC markets saw a slight improvement in confidence as fund managers marginally increased their exposure to equity during the month. Exposure to equity increased by 40 bps to 92%, while the free cash held by GCC funds decreased to 7%. However, exposure to bonds remained unchanged at 0.5% during the month.