AD Ports Completes Two Concessionary Agreements in Q2-2023

The revenue of ABU Dhabi (AD) Ports saw 66% Y-o-Y growth to $540 million in 2Q of 2023, mainly driver by the maritime cluster, according to Dubai-based Al Mal Capital Asset Management’s Al Mal Equity Fact Sheet.

In its fund manager commentary on Thursday, Al Mal said that the AD Ports also completed two concessions in the second quarter of this year: a 30-year concession agreement in Congo and a 50- year concession agreement in Karachi Port. Al Mal, which is the fund manager for many listed companies in the Middle East and North Africa (MENA) region said.

Another holding Saudi Aramco earnings reached $7.73 billion (-7% Q-o-Q) in the second quarter and surprised the market by announcing the early activation of its Performance linked Dividends Policy.

Even the UAE’s Emaar has seen growth in both malls and hospitality businesses compared with the first half of last year. The hospitality segment has seen healthy occupancy levels close to 65%-70%. Emaar plans to add 3,000 keys for the hospitality portfolio in the next five 5 years in the GCC including the UAE as well as other countries other than GCC.

The fund remained well diversified with 33 names with financials accounting for 25% of the fund. The top three holdings constituted 16% of the fund. The fund ended the first half of the year with a growth of 17.8% in YTD basis as compared to index rise of 3.8% in the same period, registering an outperformance (alpha) of 14.0% in the period.

In the month of August, the fund registered a fall of -1% as compared to a fall of -3.4% seen in the benchmark.

“We are seeing an increased activity in the primary market in the region and the fund will be actively participating in the new issuances which will change the allocation in the fund portfolio. However, we will maintain a cautious stance as expectations for the global economy is to slow in the second half of the year,” Al Mal said.

Selling Pressure

According to the Al Mal’s fact sheet, the markets have been influenced by several key themes. Firstly, there is a growing divergence in monetary policy prospects. Additionally, there has been a steady decline in inflation, although concerns persist regarding persistent core rates.

Another significant factor has been China’s struggling recovery. In July this year, US FED Chairman Jerome Powell delivered a much-anticipated speech during the annual Jackson Hole Symposium. However, the speech did not introduce any new information and remained consistent with Powell’s past remarks. As a result, the uncertainty surrounding the future policies of the Federal Reserve has increased, with decisions heavily reliant on incoming data.

The global equity markets too experienced selling pressure as reflected by the 2.05% decline in in the MSCI World index. In US, the S&P 500 Index showed a monthly decline of 1.5% while the tech-heavy NASDAQ reported the monthly decline of 1.7%.

In the GCC region, MSCI GCC Index was down 2.7% in August. Qatar Index which was the leader last month with the growth of 8.8% saw heavy selling and reported monthly decline of 8.2%. Kuwait Index too declined by 3.1% in the month.

The Dubai Financial Market (DFM) index experienced a marginal growth of 0.14% while Abu Dhabi FTSE ADX Index too registered a monthly growth of 0.32%. DFM Index is the best performing index in the region on YTD basis as it registered YTD growth of 22.4% at the end of August. However, FTSE ADX index still is in the red, showing the YTD decline of 3.9% in the same period.

Tabreed, another portfolio company in the UAE, was confirmed as preferred bidder for long-term district cooling concession for Hyderabad Pharma City master plan in India. Salik’s BoD announced a dividend of $149.20 for H1 of 2023. This is in line with Salik’s policy to pay out 100% of earnings and provides a dividend yield of 4.6%.

“We are seeing an increased activity in the primary market in the region and the fund will be actively participating in the new issuances which will change the allocation in the fund portfolio. However, we will maintain a cautious stance as expectations for the global economy is to slow in the second half of the year,” Al Mal added.