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Dubai | June 1 | 12:30
Best Performing Index Globally (May): BSE Sensex
Best Performing Index Regionally (May): Kuwait Main Market
Best Performing Index Globally (YTD): EGX 30
(*Based on indices covered in study)
The month of May as seen from the chart above reflects equity markets largely as a tale of 2 regions – GCC and the rest of the world. Evidently regional markets underperformed the rest of the globe – this inspite of what most refer to as the backbone of the region, Oil moving up 7% for the month (touched a high of USD 50.21 a barrel on the 26th May). May thus emerged the worst month for the region this year, living up to the adage of ‘Sell in May and Go Away’ (Read our post: Sell in May and Go Away! Will old adage haunt UAE share markets again this year?).
Activity in the regional markets has been lower – case in instance being that of the Saudi Stock Exchange (Tadawul) which saw trading volume at 158.38 mn shares, the lowest since 4th October 2015. Volumes are expected to remain on the lower side with the onset of Ramadan in the coming week. The ADX General, a representation of the Abu Dhabi stock market was the worst performer for the month – the bourse remained weighed down by the performance of the banking sector (the Banking index corrected nearly 7.68% for the month). Credit rating agency, Moody’s confirmed the ratings of 5 Abu Dhabi banks [National Bank of Abu Dhabi (NBAD), Abu Dhabi Commercial Bank (ADCB), Union National Bank PJSC (UNB), Al Hilal Bank (AHB) and Abu Dhabi Islamic Bank (ADIB)] with a negative outlook. Overall though the agency expects UAE and Qatar banks better placed to face economic headwinds. The TASI recorded the sharpest change with a 5% decline compared to an over 9% rise in the previous month.
Globally, the Indian stock market, led by the BSE Sensex outperformed – a slew of positive factors, ranging from an above-normal expectation of monsoon, better-than-expected Q4 corporate earnings buoyed the markets. The same has translated into sustained buying by foreign investors for the 3rd consecutive month.
As indicated in our earlier coverage, June remains an event heavy month – Fed meet on the 17th is seeing increased bets of a rate hike following the recently released minutes. The recently conducted polling by agency, ICM’s shows voters favoring Britain leave the EU up to 47% against 44% wanting to stay – the referendum scheduled for the 23rd is expected to be a major sentiment definer for the markets globally. Other intermediate influencing factors remain data emerging from China (the latest released May manufacturing Purchasing Managers’ Index (PMI) came in today at 50.1, unchanged from April) and the OPEC meet scheduled for tomorrow.