Stock markets across the nosedived to new lows following the Russian invasion of Ukraine on February 24 but those in the GCC region remained insulated from the development backed by crude oil rally for the month of February 2022.
The geopolitical situation concerning Russia and Ukraine and the events that transpired after the war broke out affected markets across the globe resulting in a steep decline in valuations. The Russian benchmark plunged 45% on that day and lost almost $250 bullion only to recover partially towards the end of the day to close with a daily decline of 38.3%.
Other prominent decliners on that day included Germany and India with declines of 4.8% and 4.7%, respectively, while the broader European benchmark dropped 3.9% during the day. The aggregate MSCI World Index declined for three consecutive weeks until last week and declined in 7 out of 8 previous weeks.
However, the 2.6% recovery a day after the invasion was due to the rekindling of hopes of talks between Russia and Ukraine almost fully offset the weekly decline. The reports of sanctions on Russia also sent Brent to $100 per barrel and traded at $101 per barrel at the close of the month.
GCC Markets Gain
The GCC equity markets remained largely insulated from the global sell-off and increased volatility. The MXGCC index declined marginally by 0.8% last week but gains during the previous weeks led to a monthly gain of 4.2% during February-2022.
All the GCC markets were in the green during the month, barring Oman which declined for the second consecutive month by 1.5%. The sector performance chart for the GCC markets showed the Energy sector leading with a gain of 8.3% followed by Hotels, Restaurant & Leisure and Capital Goods indices with gains of 5.4% and 4.9%, respectively.
Banks were next with a gain of 4.4%. On the decliner’s side, the Consumer Goods & Apparels index topped sliding by 12.0% followed by Pharma and F&B indices with declines of 4.6% and 1.6%, respectively.
ADX In Second Place
The Abu Dhabi Securities Exchange (ADX index) was the second-best performing market in the GCC, after Saudi Arabia, in February 2022 registering a 7.1% monthly growth to close at 9,319.4 points. In comparison, the exchange’s market cap increased by 8.9% during the month to reach $460 billion mainly due to the listing of Abu Dhabi Ports on the exchange during the month.
In terms of sector performance, banks index recorded an increase of 10.2%, the largest monthly gain among the indices, to reach 13,717.8 points driven mainly by Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank with share price gains of 20.1% and 27.5% respectively. The Telecom index followed witnessing a growth of 5.5% registering the second largest gain among the indices to close at 8,558.64 points. The Consumer Staples index was the only decliner during the month with a fall of 3.1%.
Dubai Financial Market
After showing flattish returns during January-2022, the Dubai Financial Market (DFM) General Index reported the third best performance in the GCC during February-2022. The benchmark gained 4.7% during the month and closed at 3,354.64 points.
The monthly index performance was supported by gains in six out of nine sectoral indices including large-cap sectors such as Banks, Telecom and Real Estate. The banking sector index posted a monthly gain of 8.2% driven mainly by gain in shares of Emirates Investment Bank and Commercial Bank of Dubai with a rise of 10.7% and 11.1%, respectively.
The Transportation sector index witnessed the second biggest monthly rise among the indices registering a 5.4% gain to close the month at 838.3 points mainly on the back of Air Arabia’s 13.1% share price growth that came after the airline reported net profit of $196 million for 2021 as compared to a loss of $52.27 million during 2020.
Revenue for the company was up 71% during the year to reach $870 million but fell short of pre-pandemic revenue of $1.31 billion in 2019.
Four of the top five monthly gainers in DFM exchange were insurance companies. National General Insurance (NGIN) lead the monthly gainers table recording a 18.4% increase in share price that came after the company reported 53.6% increase in 2021 net profits that reached $19.28 million.
Topline also improved by 11.6% to reach $175.82 million in 2021 as compared to $157.61 million in 2020. Dubai Insurance Co and Oman Insurance Co followed with 17.4% and 14.6% gains, respectively. The gain in shares of Dubai Insurance was also led by higher profits in FY-2021 that increased by 46.5% to reach $21.94 million while Topline improved by a third to reach $330 million in 2021.
On the decliners’ side, Islamic Arab Insurance (Salama) topped the list with a decline of 12.1%, followed by Ithmaar Holding and Union Properties Co which saw 11.9% and 11.2% fall in share prices, respectively. The decline in shares of Salama came after the insurance company reported a 69.6% decline in FY-2021 net profits that reached $13.01 million mainly led by 6.8% decline in revenues during the year.
Trading activity on the exchange declined during the month as compared to previous month. Total volume of shares btraded declined by 23.3% to reach 2.6 billion shares as compared to 3.4 billion shares during January 2022. Total value traded on the exchange also decreased by 11.1% to reach $1.58 billion in February as compared to $1.77 billion during the previous month.