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IndexLevelChg%
Large Cap3,936 0.03
Med Cap3,940 0.18
Small Cap5,130 0.19
Micro Cap8,623 0.05

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Ticker Price Volume
SIPCHEM 16.21 596,021
QNBK 147 369,995
SABIC 96.4 4,090,978
ALINMATOKIO 17.09 173,335
BKMB 0.38 5,415,834
DIB 5.53 648,652
SOCCO 61.73 6,226

Market Review and Outlook

Source: NCB Capital

Sukuk: A Gradual Recovery

Vibrancy has begun to return to Islamic financing after a bleak year in 2008 in terms of both the value and number of issues. The global value of sukuk issued increased a hefty 45.5% to USD6.18 bn in 3Q09, compared with USD3.37 bn in 3Q08. The rally witnessed last quarter is following the trend which has so far characterized 2009. This is a clear indication that global capital markets are beginning to recover and sukuk is once more regaining its position as a vital avenue for raising funds. Saudi Arabia, for the first time this year, has ranked highest in the list of issuing countries, enjoying 44.1% of the total value of global sukuk in 3Q09. This was primarily due to an issuance made by Saudi Electric Company’s on Jul 6 worth USD1.87 bn. Islamic Development Bank (IDB) also issued a sukuk worth USD850 mn in the same quarter. Although this reflects confidence returning to the markets and improved conditions, the availability of credit remains an issue. Jabal Omar Development Company announced an IPO on Jun 20, worth USD 3.03 bn, however due to tight credit conditions have only secured USD 400mn. While credit conditions have not yet normalized, it is safe to say that sentiment towards corporate sukuk has recovered substantially and will continue to do so in 2010.

US Trade Deficit, No Silver Lining

The US trade deficit declined to USD30.7bn in Aug from a revised USD31.9 bn the previous month. Imports decreased moderately by USD0.9 bn to USD158.9bn, while exports rose to their highest level this year (USD128.2 bn), marking their fourth consecutive monthly increase. Although the headline may seem encouraging, little has in fact changed. The Jul to Aug decrease in imports reflects decreases in industrial supplies (USD1 bn) and consumer goods (USD 0.7bn). This implies that the two engines of growth in the US economy, investment and consumer demand, are still in a fragile state. On the export side, the overall decline in exported goods was offset by a USD0.2 bn increase in exported services, mainly from travel and other transportation services. Going forward, exports are expected to remain resilient due to two main reasons: (1) the global economy, especially strengthening economic activity from Asia, is likely to support US exports in the medium-term, and (2) the USD, which has been weakening since Mar 09, should improve the competitiveness of US goods, lending further support. A nearterm sustainable improvement in imports, however, which would reflect stabilization in the US economy, is not as promising.

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