Surprise OPEC move fails to reverse regional markets’ selling pressure – Al Masah Weekly report


Regional markets had negative to low impact on the heels of OPEC’s decision to cut outputs

al masah capital logoThe last week of September saw a surprise step by OPEC members to cut output (between 32.5 million bpd and 33.0 million bpd from about 33.5 million bpd) with more details about this agreement to be finalized at OPEC’s policy meeting in November. Oil prices took the news positively and have been on the rise since the meeting, currently trading above the USD50 mark, however, this major news surprisingly didn’t have the same effect on the regional markets said the Al Masah Weekly research report.

KSA Market reaction and Performance

Saudi Arabia was the most negatively affected market among its peers, going down by 5.5% for the week and 7.5% for the month. The decision taken by the Saudi Government to reduce ministers’ salaries by 20% and canceling bonus payments for state employees alongside US congress approving a law that effectively allows citizens to sue Saudi Arabia for 9/11 combined to offset the OPEC news and provide a major catalyst to the severity of the downward move.

UAE and GCC markets

UAE markets followed the downward trajectory for the week with Dubai going down by 1.11% and Abu Dhabi by 0.86 %, with no company specific news. Egypt and Kuwait both went down by 0.41% and 0.14% respectively over the same period. Bahrain and Qatar were the only two markets ending the week as gainers with both going up by 1.4% and 0.2% respectively. Global markets took the oil news positively with most of the major indices up since the OPEC news broke.

A tough September for regional markets and the average monthly loss of 2% means that they will start this coming week and the new quarter on the back foot. Any attempts to close the year on a positive will depend on how October price action responds to a new wall of worry where oil price finding a new high is offset by declining regional fundamentals (especially in Saudi) and  a spooked global environment going into the US November general elections.

Indexes Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 3,474.38 -1.12% -0.86% 10.26%
Abu Dhabi (ADSMI) 4,476.32 -0.86% 0.12% 3.93%
Saudi (SASEIDX) 5,623.34 -5.47% -7.50% -18.64%
Kuwait (KWSE) 5,398.39 -0.14% -0.39% -3.86%
Egypt (EGX30) 7,881.11 -0.41% -3.39% 12.49%
Qatar (DSM) 10,435.46 0.22% -5.04% 0.06%
Bahrain (BHSEIDX) 1,150.00 1.37% 0.68% -5.42%
Oman (MSM30) 5,726.20 -0.69% -0.15% 5.92%
TR GCC (Reuters) 197.51 0.00% -1.16% 1.58%
DJ MENA 462.30 -2.19% -3.38% -7.16%

About Al Masah Capital:

Al Masah Capital is one of the fastest growing alternative asset management and advisory firms focused on the MENA and SEA regions. Established in 2010 Al Masah Capital provides tailored solutions to a broad investor base, offering private equity advisory (across Healthcare, Education, Food & Beverages, Logistics and other consumer driven sectors), asset management, corporate and real estate advisory as well as public market research services.

With operations in Dubai, Abu Dhabi and Singapore, Al Masah advises qualifying investors on growth opportunities in 13 focus markets in MENA and South East Asia.