GCC markets record biggest monthly drop since Jan 2016

June 03, 2019

 The stock markets in the GCC countries recorded their biggest monthly declines since January 2016 during the last month as the risks of escalating trade war between the US and China and geopolitical tensions related to Iran continue to affect the regional markets.

Aggregate GCC markets, tracked by the S&P GCC TRI, dropped 5.4 per cent during May 2019, its biggest monthly decline since January 2016.

‘The decline came primarily due to regional geopolitical issues, coupled with lower trading activity in most GCC markets due to Ramadan’, Kuwait-based KAMCO Investment said in a report on Sunday.

GCC markets record biggest monthly drop since Jan 2016

Barring Kuwait, all the GCC markets declined during May with Saudi Arabia seeing the steepest fall of 8.5 per cent. On the other hand, the 1.8 per cent gains recorded by the Kuwait’s main index pushed the benchmark’s year-to-date returns to the highest in the GCC at 12.8 per cent.

The stock market rout was global as well, as the MSCI World index declined 6.1 per cent on month-on-month, and all major global indices declined during May.

‘The ongoing trade war between the US and China was a key concern, that dragged the S&P 500 Index to multi-month lows. In addition, underwhelming economic data also pushed indices and sentiment lower. The extended trade war between the world’s largest trading partners spooked investors as there was no certain near term resolution in sight’, KAMCO Investment said.

After gaining by 3.6 per cent month-on-month in April, Abu Dhabi’s ADX index fell by 4.8 per cent in May. Dubai Financial Market (DFM) underperformed its UAE counterpart ADX in May and declined by 5.3 per cent on month-on-month basis, after being amongst the best performing markets in the GCC in April.

Qatar Exchange declined by 1 per cent in May, after gaining in the prior month. Oman’s MSM30 index once again declined during May, albeit marginally, to reach a new record low by the end of the month. The MSM30 index declined 0.3 per cent during May, pushing the year-to-date decline to the lowest in the GCC at 9 per cent.

‘Going forward, the trading activity within the region will be subdued due to Eid holidays. Moreover, sentiment will be dominated by the developments in the regional geopolitical environment and rising trade tensions between the world’s two largest economies’, Allied Investment Partners PJSC said in its note on Sunday.