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UAE’s October and November Capital market performances and two strong movers

For the MENA region, optimism over a COVID-19 vaccine and surging oil prices have pushed markets higher during the November month

Trading activity might continue to be driven by news on a number of new cases and economic data as investors The MSCI GCC Index closed at a 10-week low by end October-2020 to report a monthly decline of 2.1% DIB’s latest Sukuk brings the total value of Sukuk listed in Dubai to $75.3 bn

Most major Gulf markets struggled in the final trading session of the week on Thursday, as a rally fuelled by optimism around COVID-19 vaccine developments lost steam

Saudi Arabia’s benchmark index fell about 0.6% after a four-session winning run but was on track to eke out a fourth straight weekly gain.

Financial stocks dragged down the index with the top three losers belonging to that sector.

Al-Rajhi Bank and National Commercial Bank declined 0.4% and 1%, respectively.

Dubai’s main share index retreated 0.4%, with top lender Emirates NBD and real estate stock Emaar Properties declining 0.9% and 1.5%, respectively.

The Dubai benchmark has gained for the past four sessions in a row.

Going forward, trading activity might continue to be broadly driven by news on a number of new cases and economic data as investors will closely monitor the surge in new cases, which could lead to more stringent restrictions and impact the economic recovery. 

 For the MENA region, the development in global markets will weigh on regional equities as further restrictions on economic activity will lead to downward pressure on oil prices. Hence, regional investors might remain cautious over the changing dynamics and wait for more clarity to buy into markets at current levels.

Most GCC stock markets fell during October as concerns ratcheted up over the surge in the number of COVID-19 cases and the re-imposition of lockdowns in many cities, according to the GCC Markets Monthly Report by Kamco Invest.

The MSCI GCC Index closed at a 10-week low level by the end of October-2020 to report a monthly decline of 2.1%.

In terms of year-to-date (YTD) returns, the October decline once again pushed all the GCC equity markets back in the red with DFM showing the biggest drop of 21%, while Saudi Arabia’s TASI showed the smallest decline of 5.7%.

Read: MENA mergers and acquisitions up to Q3 2020 and 2021 outlooks for UAE, Saudi

Read: Growth of Islamic finance in numbers globally, in Saudi, and the UAE

UAE equity movers

Al Mal Capital (“AMC”) aims to continue the stellar performance in its UAE Equity Fund due to the growing diversity in the domestic economy and with the reforms that are expected to attract more foreign investors.

Even amid the economic challenges for the UAE in 2020 due to COVID-19 and the collapse in oil prices, the fund is up 3.3% year to date. This is particularly notable given the Dubai index has lost 11%.

“The real estate and financial sectors have been under pressure this year, and the fund which has an exposure of nearly 60% to these industries has benefited from a combination of its allocation to defensive sectors and by taking an active approach in investing in oversold names,” reveals AMC’s Head of Asset Management, Sherif El Haddad.

The fund has also benefitted from M&A activity in the UAE and continues to be positioned in businesses with good management where the firm sees strong growth potential.

Helping macro optimism is the Dubai government’s $136 bn economic stimulus package to support various business sectors across the economy, with the package targeted to shore up SMEs, through a set of rent reductions and fee exemptions.

Dubai Islamic Bank (DIB) recently celebrated the listing of a $1 billion Sukuk on Nasdaq Dubai.

The Sukuk achieved a strong 5.7 times subscription rate, attracting more than 150 high-quality investors from the Middle East and around the world, offering a profit rate of 4.625% per annum. 

The successful debt issuance was DIB’s first since it completed the integration of Noor Bank, further enhancing DIB’s position as one of the leading Islamic banks in the world.

DIB is the leading UAE-based Sukuk issuer by value on Nasdaq Dubai with a total of $7.3 bn.

DIB’s latest Sukuk brings the total value of Sukuk listed in Dubai to $75.3 bn, making the emirate one of the largest Islamic bond listing centers in the world by value.

So far in 2020, the value of all new debt listings on Nasdaq Dubai has reached a record annual high of $18.4 bn up 4% from the previous record of 417.7 bn in all of 2019.  

Global Sukuk issuance reached $130.5 bn in the first 9 months of 2020, up 2.5% from $127.3 bn in the same period of 2019, according to Refinitiv.  

The State of the Global Islamic Economy Report 2020/2021 estimates that the value of all Islamic finance assets will increase by 28% from $2.88 trillion in 2019 to $3.69 trn by 2024.

DIB’s latest one billion US dollar Sukuk listed on Nasdaq Dubai on November 19, 2020.