Volumes in the GCC decreased by 25%, MoM, while value traded decreased 38% over the month to $49billion. This was on the back of 22% MoM drop in volumes and 16% decrease in Value Traded in April. Saudi Arabia, which accounted for 88% of GCC’s total value traded, witnessed a 40% MoM drop in value traded.
“Global factors weighed down on GCC with all the markets ending in red. Dubai was the largest loser shedding 9.8% for the month, followed by Saudi Arabia which lost 7.7%. Saudi has been the best performing market YTD, with a gain of 8.7%. Kuwait lost 2.2% May cutting its yearly gain to 0.71%.”
The IMF, after its latest assessment, forecasts Saudi Arabia to grow by 6% in 2012 with private sector increasing its role in the economy. IMF expects fiscal surplus at 17% of GDP and external surplus at 27% of GDP.
After last month’s decision by MSCI to reintroduce MSCI Saudi Arabia Domestic Indices and also make changes to MSCI GCC Countries & MSCI Arabian Markets Index, the index provided announced that the indices will be added on June 26, 2012.
IMF said GREs in the UAE have to repay USD 30bn of maturing loans this year and face a “significant” amount of debt falling due in 2014 & 2015.
S&P affirmed its ‘AA/A-1+’ long and short-term foreign and local currency ratings on Kuwait with stable outlook. The ratings are supported by Kuwait’s rich resource endowment and strong external and fiscal balance sheet positions while underdeveloped private sector and strong dependence on oil revenues constrained the ratings
Qatar has projected $49.2billion of spending in FY 2012/13, a rise of 28% over the previous year. Based on an average oil price of $65/bl, revenue is seen increasing 27%. The budget projects a surplus of 8% of GDP.
Global markets were negative in May due to worsening conditions in the Euro Zone. The World broad index was down 8.7% as investors sold-off equities and flocked to safer assets. Europe, which is the epicenter of crisis, witnessed deep cuts with MSCI Europe losing 12.5% for the month. The flight to safety resulted in 10-year US Treasury yield hitting an all-time low of 1.642%.
CBOE VIX increased 41% during the month signaling heightened volatility. Commodities also suffered large losses with Crude oil shedding 13.6% due to concerns on demand slowdown and increasing inventories. ‘Safe haven’ gold too saw a cut of 6%. The winner clearly is the US dollar index which was up 5.4% in May.