The equity funds registered for sale in the GCC region lost momentum during Q2, recording a fall of nine percent, mainly due to market conditions across the region, the Second Quarter 2010 GCC Fund Market Insight Report from Lipper showed on Wednesday. Of the 73 equity categories, just 13 ended the second quarter in positive territory. Funds invested in Asia topped the semiannual rankings for the first half of 2010, with Equity Indonesia gaining 18.12 percent during the period, while Equity Saudi Arabia rose 2.34 percent. Gold and precious metals performed well, posting a 9.48 percent return. Merieme Boutayeb, research analyst at Lipper, said “the GCC markets ended first half 2010 on a negative note, after an upbeat first quarter that was marked by positive global returns. The region was not immune to the euro zone difficulties because of the robust trade linkages established between the two economies though comparing the financial and macroeconomic situation in the GCC and the euro zone reveals a radical difference. “ For funds domiciled in GCC markets, telecoms proved to be the top performing sector achieving a semiannual return of six per cent. Funds invested in Saudi Arabian equities gained 2.10 percent during the first half of 2010, supported by a strong first quarter which saw gains of 10.50 percent. Among Saudi funds, Global Investment House's Global Saudi Equity Shariah-compliant (Al Noor) fund recorded the best performance. The best sector performing fund registered for sale in the GCC was the Franklin Pharma Fund-Growth with an increase of 23 percent in the first half of the year. Bond funds declined 3.47 percent during the second quarter following a positive return of 0.98 per cent during the first quarter to give a negative return of 2.48 percent for the first half of 2010. This was reflective of the turmoil experienced in the euro-sovereign bond market during Q2 and the decline of the euro against the US dollar. US dollar denominated bond funds posted positive returns during the quarter with the Bond USD category up 4.85 percent and the Bond USD High Yield category increasing by 3.26 per cent. Topping the currency bonds was the Japanese Bond JPY category which rose 7.34 percent. The second quarter of 2010 saw two new Shariah-compliant funds registered for sale in the GCC taking the total number to 211. During the first half of 2010 these collectively fell 2.30 percent despite an upbeat first quarter. Dunny Moonesawmy, Lipper's head of Middle East Research, added: “Fund managers in the region closely monitor MEA economic development and have a strong knowledge of the Asian market. Their expertise about these high-growth markets matches local investors' objectives of accepting higher risks as counterparts of higher return expectations. While most assets are invested in local stock markets, there is a significant number of investment funds invested in Asia and in North Africa. The region is thus an interesting window for investors to access expertise that is maybe less readily available in Western countries.” NIC Zajil Services & Telecommunications was the best performing Shariah-compliant fund over the first six months of the year, recording a 15.37 percent increase, managed by Kuwait's National Investments Company. Of the 20 top performing Islamic funds available for sale in the GCC, 12 were invested in Saudi Arabia. Bond funds declined 3.47 percent during the second quarter following a positive return of 0.98 percent during the first quarter to give a negative return of 2.48 percent for the first half of 2010 amid the turmoil experienced in the euro-sovereign bond market during Q2 and the decline of the euro against the US dollar.
