An Overview of the Middle East Financial Market

An Overview of the Middle East Financial Market

The Middle East market has largely beat expectations last year. Most of the markets in the region ended on a high note at the end of the year.

The positive market performance was mainly due to the investment stimulus of the government in the Gulf countries.

Here we will provide a brief overview of the financial and economic conditions in the Gulf region.

Qatar

Qatar was the best performing market in 2018 finishing the year 20 percent higher in terms of market value.

The growth in the market was incited by an increase in the foreign ownership limit of local financial companies.

Due to the increase in the limit, the biggest gains were reported by Qatar Islamic Bank and Qatar National Bank. The shares of these two companies were up 56.5 percent and 53.4 percent respectively.

Saudi Arabia

The stock market in Saudi Arabia had also performed spectacularly in 2018. The stock market had gained nearly 8.4 percent points. The uptick in the stock market was due to the announcements by S&P Dow Jones and FTSE Russell that the biggest stocks of the country will feature in their indices of the global emerging markets.

Experts predict that this year active and passive investments in the Saudi stock market will likely amount to $17 billion each. The biggest gainer in the market has been Riyad Bank that has been in talks with National Commercial Bank for a proposed merger.

Kuwait

Stock market momentum in Kuwait was also high in 2018. The momentum was shaped by the inclusion of the index in FTSE Russell. In 2017, the authority had announced that it will upgrade the status of Kuwait to the emerging market in first phases with the first upgrade taking place in Sep 2018 and the second upgrade in December 2018. This has resulted in an increase in the trade volumes in the Kuwait stock market at the end of the year.

In addition, in June last year, MSCI had announced that it had included Boursa Kuwait in the watch list. The positive expectations regarding the upgrade of Kuwait’s market had led to increased speculative flows in the country.

Bahrain

Stock markets in Bahrain have been largely mixed. The market had finished in a positive territory increasing last year by about 0.4 percent. The trade volume in the country had also increased last year.

UAE

The ADX had finished the year on a positive note increasing by nearly 10.7 percent. The increase in the stock market was led by First Abu Dhabi Bank whose value had increased by nearly 35 percent.

Increased government spending in the retail and tourism sector has boosted the stock market in the UAE. The increased investment aligned with the vision Expo 2020. The expectations of increased investment will likely lead to a rally in 2019.

Last year’s performance proves that the country can sustain growth meeting challenges in the market and attracting foreign investment.

The retail sector in the UAE has appeared healthier despite the hurdle posted by VAT that was introduced last year.

The impact of VAT was significant and had an impact on consumer spending. At the start of the year, there are reasons to be optimistic about stock market performance in UAE.

While brick and mortar companies in western countries are winding up due to competition from online businesses, they are thriving in the UAE.

The retail industry had seen an increase in the past year with UAE striving to position itself as an important player in the global retail market.

Retail physical stores have been resilient and strong. They are thriving and adding physical retail space in the country. There has been a focus on improving customer experience through a modern and innovative approach.

Dubai mall attracted a large number of foreign visitors. Last year there were nearly 84 million visitors from all over the world.

The tourism industry is also thriving in the UAE.

Dubai ranks as the fourth top destination for international travelers, according to the 2018 MasterCard Global Destination Cities.

Being a center of tourism in the GCC region, Dubai had attracted about 15.8 million visitors in 2017 and the approximate spending was $29.7 billion. The city had reclaimed the number one position in foreign retailer presence with a share of 62 percent. During the first nine months of 2018, the city had attracted almost 11.6 million foreign visitors.

Fueled by the fledgling tourism sector, the projected economic growth rate in Dubai is 5.5 percent in 2019. New policies like Stopover Asia are expected to boost the number of international visitors.

Moreover, retail initiatives such as the Dubai Shopping Festival, Dubai Summer Surprises, and others attract a large number of foreign visitors.

All established malls in Dubai continue to post positive gains. Emaar Malls and Majid Al Futtaim have experienced increased profits during the promotional periods that go on to show the effectiveness of the schemes.

Tourists in the GCC region, in general, attracted the largest number of visitors.

Nearly 23 percent of the international travelers had visited Gulf countries with most spending time in Dubai.

A lot of visitors are attracted to the luxury retail outlets have increased in Dubai. They spend around nine percent on clothing boutiques and five percent on watches and jewelry.

Apart from tourists, international brands are also attracted to the UAE due to the promising investment potential. The country is ranked as the seventh most popular destination for foreign retailers. Most of them prefer Dubai as an entry point in the GCC region.

In the past twelve months, many different brands have opened their stores in the region. A lot of fashion and beauty brands such as American Rag and Charlotte Tilbury have opened stores in Dubai.

The retail market in Gulf countries is dominated by brick and mortar stores despite the presence of many e-retailers such as Noon.com and Souq.com that has been acquired by Amazon.

High-end foreign labels such as H&M, Dolce & Gabbana, Hermes, and Gap have reported positive earnings in the region. This has been largely due to the positive economic and financial policies of the government.