Posted on January 14, 2015

Mubasher Financial Services, one of the leading financial institutions in the Middle East, today revealed its outlook for MENA equity markets in 2015 at a roundtable event in Dubai. During the event, Mr. Malek Kanawati, CEO, Mubasher along with Mr. Amr Hussein Elalfy, Managing Director, Global Head of Research at Mubasher Financial Services unveiled their outlook for MENA markets in 2015 as well as updated their favorite stock lists.

MubasherTrade sets its outlook 2 [].jpg

Amr Hussein Elalfy, MBA, CFA, Managing Director, Global Head of Research at Mubasher Financial Services said: “Volatility is once again taking a front seat when it comes to setting an investment policy for global markets, including our MENA markets. Undoubtedly, the abrupt and severe sell-off in oil markets has added to rising volatility in equity markets in our part of the world, but at the same time it has offered a silver lining.

On one hand, lower oil prices should help boost global economic growth in 2015. On the other hand, the recent sell-off in MENA equity markets means valuation levels are not stretched, giving way for more sensible entry points. We are generally positive on MENA equities for 2015, especially in the second half of the year as sentiment improves. Based on our analysis, we are overweight Egypt, Saudi Arabia, and the UAE.”

Key Findings

  • Global markets will exhibit more volatility
  • MENA markets will remain captive to oil price moves, but the correlation should weaken as investors get accustomed to lower oil prices
  • MubasherTrade sets its outlook 3 [].jpgThe silver lining – lower oil prices should support global growth
  • Sell-off in MENA markets should abate as investors de-leverage
  • We are Overweight Egypt, Saudi Arabia and the UAE; Neutral on Qatar
  • 2015 investment strategy for key MENA equities: We are spelling out our 2015 investment strategy for MENA equities. First, we looked at the macroeconomic picture of Egypt, Jordan and the six-country GCC bloc, then we drilled down into the six major sectors in each of the four key MENA markets, namely Saudi Arabia – the largest by far – and the three emerging markets Egypt, Qatar, and the UAE. We then set year-end target levels for each of them, taking into account the target forward price-to-earnings ratio, consensus earnings growth, and adjusted for the macroeconomic view.
  • Stock market and sector calls: Based on our estimated total return and taking into account each country’s rating, we are Overweight Egypt, Saudi Arabia, and the UAE and Neutral on Qatar. In terms of sectors, we are Overweight Consumer & Health Care in Egypt and Saudi Arabia; Financials in Egypt, Saudi Arabia, and the UAE; Industrials in Saudi Arabia and the UAE; Real Estate in Egypt and Saudi Arabia; and Telecoms in Qatar and the UAE.
  • We update our model portfolios and add two new ones for Qatar and the UAE: We are also updating our MENA, Egypt, and KSA Favorite Lists (FLs) and launching two new FLs for Qatar and the UAE.