After gaining by 3 percent in July, the GCC markets continued their positive streak with a return of 2.3 percent in August, Kuwait Financial Center (Markaz) said on Monday. The returns in August marks the sixth consecutive month of positive gains in the current year. Among the six GCC markets, Oman gained the highest with a return of 9 percent (MSCI indices) closely followed by Kuwait with a return of 8 percent. Bahrain is the only market in the GCC which continues to lag behind in terms of YTD returns both in comparison to other GCC countries and also in comparison to other markets across the world. Bahrain's YTD performance has been at -19 percent. With the rise in August, the GCC markets which were available at a discount to emerging market peers till July are currently valued at more than the emerging market peers. It has to be noted that the emerging markets witnessed a flat month in August with a return of -0.14 percent. The current trailing 12 month PE for GCC as a whole is at 18.59x as compared to emerging market P/E at 16.17x. The discount rates from central bank stayed constant in August as compared to July. For Kuwait, the central bank discount rate was at 3 percent, which is a decline from a high of 6.25 percent in Dec. ‘07 and the repurchase rate was at 1.75, which is a decline from a high of 5.87 percent in Mar 2007. The value traded in the stock markets continue to be low with the month of August posting a total value traded of $37 billion, which is a 6 percent decline on a MoM basis and a 22 percent decline on a YoY basis. The gains in July have continued well into August. The MSCI World which returned 9 percent in July gained another 3 percent in August taking its YTD returns to 24 percent. However, the robust bull run in China got terminated in August. Till July, the Chinese Shanghai A share index was up by 87 percent from the beginning of the year with a consecutive MoM rise from the beginning of the year. In August, the Chinese A share index declined by 21 percent puling down the YTD returns to 46 percent. Also, the month of August for the first time in the current year showed a developed market out performance over emerging markets. Oil posted its first monthly negative return in August at -2 percent after posting consecutive positive returns from the beginning of the year.
