Markets swung into positives for the first quarter of 2010, led by healthier corporate earnings, stronger economic outlooks and more positive corporate news. MSCI GCC gained 12 percent in 1Q10 after losing 8 percent in 4Q09.
The quarter’s worst performer was MSCI Bahrain, which remains in the red while the best performance came from MSCI Kuwait which gained 19 percent in 1Q10, driven by positive news from Zain which lifted most blue chips. MSCI Saudi followed with a gain of 13 percent for the quarter.
GCC equity funds had an asset weighted return of 11 percent for 1Q10 as fund managers took advantage of blue chip gains as local indices were carried upwards by earnings momentum and strong economic outlooks.
Asset under management (AUM) was just over $ 12.3 billion in 1Q10 representing an institutionalization rate (AUM/Mcap) of 1.6 percent.
Both Saudi Arabia and Kuwait saw their AUM expand in the first quarter by 7 percent and 4 percent, respectively.
Fund managers continue to favor Saudi Arabia, with an allocation of 43 percent. Confidence in the Kuwait market has declined, from 20 percent in June to 11 percent in March 2010; the same can be said for the UAE, where managers allocated 17 percent of their assets in September before cutting exposure to 11 percent in March.
Exposure to equities increased throughout 2009 and into 2010, with a 93 percent allocation in March, while Cash exposure is down to 7 percent, based on asset weighted average, reflecting a higher risk appetite from local and foreign investors.
The Tadawul index gained 11 percent in 1Q10 as positive end of year results, strong economic outlook and healthy oil prices boosted the market.
