Kuwaiti Stocks Retreat Ahead of FTSE Implementation: Inside EM

(Bloomberg) -- Kuwait’s main equities index fell a day before its inclusion in FTSE Russell’s emerging-markets gauge, trimming one of the best rallies in Middle Eastern stock markets this year.

A drop just before inclusion isn’t surprising: the same thing happened to stocks in Qatar and the United Arab Emirates when they were upgraded to emerging-market status by MSCI Inc. in 2014. In Pakistan, the main index lost 15 percent last year even after an upgrade.

EFG-Hermes expects $930 million in inflows to Kuwaiti stocks as a result of FTSE’s upgrade, which was first announced last year.

  • Benchmarks in Qatar, Abu Dhabi, Bahrain and Egypt climb, while Dubai and Oman fall
  • MSCI Emerging Markets Index of stocks rose 2.2% last week, trimming its loss this year to 9%
    • An MSCI index tracking currencies from developing economies gained 0.7% last week, the most since Feb. 16
    • EM Review: Emerging Markets Extend Rally on Trade War Breather

MIDDLE EASTERN MARKETS:

  • Kuwait’s Premier Market Price Return Index falls 1.4% at the close on Sunday, trimming its gain this year to 10%
    • Volume of trade on Thursday was more than five times its 15-day average as investors positioned for the FTSE Russell upgrade
    • EFG-Hermes expects the 1st stage of upgrade to trigger $465m in flows to stocks, with NBK, KFH, ZAIN, and Agility benefiting the most, according to Mohamad Al Hajj, an equities strategist based in Dubai
    • A further $465m are expected in phase 2, scheduled for December, Al Hajj estimates
    • MORE: Move Over Saudi. Meet Stock Investors’ New Darling in Gulf
  • Dubai’s DFM General Index falls 0.1% at market close, while Abu Dhabi’s ADX General Index climbs 0.2%
    • Emaar Properties retreats 0.2% in Dubai; ADCB gains 0.9% in Abu Dhabi
    • NOTE: Dubai’s gauge is down 18% this year, while Abu Dhabi’s is up 11%
    • U.A.E. banks have performed better than real estate stocks this year on strong fundamentals and resilient earnings, Aarthi Chandrasekaran, vice president at Shuaa Capital in Dubai, said in an interview with Bloomberg TV
      • In real estate, which has the biggest representation in Dubai’s market, there’s been oversupply, she said
      • DIB and Emirates NBD have been “very good stories” as they’ve underperformed banking indexes this year, she said
  • Qatar’s QE Index finishes little changed, after falling 2.6% last week
    • QNB and QIB both rise 0.7%; Doha Bank gains 2%
  • Egypt’s EGX 30 climbs 1.3%, after dropping 8% last week, its worst weekly performance since January 2016
    • EFG-Hermes advances 6.4%; contributes the most to index increase
    • Other stocks gaining: Sidi Kerir +4.7%, ElSewedy +2.2%
    • Recent market drop of the index opens up long-term opportunities, amidst stable macro and earnings outlook, says EFG-Hermes’ Al Hajj
    • MORE: Egypt’s Cira Sets IPO Price at EGP6/Share
  • Bahrain’s main equities index advances 0.9%, while Oman’s falls 0.2%
  • Saudi Arabia’s and Israel’s stock exchanges are closed due to local holidays
  • MORE: Oman Says an Oil-Output Hike Could Be Suggested at OPEC+ Meeting

OTHER EMERGING MARKETS:

  • Putin’s Government Said to Fume After First Rate Hike Since 2014
  • Argentina 100-Year Bond Rally Advances on IMF Optimism
  • Brazil Hedge Fund That Trounced Peers Is Retrenching Before Vote
  • Hand of the State Seen Over Polish Stocks on FTSE Graduation Day
  • Invesco Likes High-Grade Debt, Cautious on Emerging Markets: Q&A

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