Middle East equity markets retreat 2% in June

MENA equity markets retreated by two percent in June bringing down their gains to 12.6 percent in the first half of 2009, according to a new report published on Wednesday.

Regarding GCC markets, Oman was the only market to gain in June, Rasmala Investment Bank data revealed.

Saudi banks led the market down as they fell by eight percent in June on concerns of exposure to the troubled Saudi groups. The Saudi Central bank froze bank accounts related to two private Saudi companies - Ahmed Al Gosaibi and Saad Group, after defaulting on payments and announcing the restructuring of loans worth approximately $6 billion, the report said.

Among the few gainers last month was Almarai which bucked the general market trend by gaining 8.2 percent on the back of an aggressive acquisition spree.

Investors' concern about Emaar's merger plans and the exposure of UAE banks to the troubled Saudi groups negatively impacted the stock market performance for June, with the market falling by 1.4 percent.

The report predicted that the investors concerns will continue to affect sentiment negatively during July.

"There does not appear to be potential for positive Q2 09 earnings, therefore we remain sceptical about the UAE market in the short term," the report added.

The Kuwaiti market fell by 0.9 percent bringing its total gains this year to 3.8 percent. Trading values were up by 21 percent, Rasmala said, with top gainers including Boubyan Bank and Zain.
"Kuwait remains expensive relative to its GCC peers, and financial losses are expected to impact corporate earnings negatively in Q2 09," the report added.

Qatar was the worst performing market in June falling by seven percent, led by Industries Qatar and Commercial Bank Qatar.

"The outlook still remains positive for Qatar, which is expected to report a real GDP growth of at least seven percent in 2009, and is set to increase its annual gas production capacity from 39 million tonnes to 60 million tonnes by the end of this year," said Rasmala.

The Omani market was the only GCC to record positive performance in June gaining two percent despite Bank Muscat reporting exposure to the troubled Saudi groups.

Rasmala added: "Valuations in the Omani market remain reasonable versus their regional peers and the market is expected to continue its gradual recovery over the medium term."

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