Minimalism returns

A summer lull hits MENA stock markets

(Pete Bellis | Flickr | CC BY 2.0)

Minimalism is back in force on the region’s security markets and minimalism thus is in order for reporting on week 33 in the bourses of the Middle East and North Africa. Weekly index gains were topped by rises of 3.4 and 2.6 percent in Doha and Abu Dhabi in the Gulf and by a 3 percent climb in the EGX 30; drops deserving that name were restrained to 1.5 percent in Jordan and 1.2 percent in Bahrain.

Concerning news, the Egyptian government adjusted its statements on the Suez Canal’s new upgrade to say that financing would be by investment certificates instead of an initial public offering and regional property leader Emaar clarified in a market disclosure that the date for the initial public offering of its Malls Unit has not been finalized yet. Local media reports implying a flotation in September were “purely speculative,” the company said.

After ingesting this store of information, it should be safe for market participants to refocus their eyes back on the cultural and natural vistas of their various vacation environments. The region’s more active investors are currently presumed to be holidaying in Zurich and Geneva where their wealth managers are never more than a local phone call away (see the forthcoming wealth management report in Executive’s September issue). But those who made a smarter choice and came to Lebanon for their time of liberty from investment work could enjoy some great summer concerts and more stable weather.

When comparing Beirut and Bhamdoun’s reliable sunshine to Swiss conditions, our low 30s and zero rain made a convincing summer in contrast to 38 millimeters of precipitation in Geneva and almost double that in Zurich during week 33, not to mention daily “highs” that ranged below 20 degrees for most of the week in both Swiss cities.

From a markets perspective, there is an additional blood pressure benefit from vacationing in Beirut: even the most compulsive investor will have found it possible to resist the excitement of equities trading on the Beirut Stock Exchange, where total volume in week 33 reached some 305,000 shares. This was not only due to the fact that the trading week was cut to four days by an important holiday and the recent failures in agreeing on a new president, but also came as a result of Lebanon’s long term systemic need to upscale its capital markets.

Vis-à-vis the MENA summer lull, international markets reflected the growing unpredictability of geopolitical and economic conditions. In one example, soon-disputed Ukrainian claims of having hit a Russian military convoy in eastern Ukraine on August 15 led to short term falls in several Western stock markets. Temporary drops near 1 percent in the Dow Jones and DAX indices led to media reports of “shocks” and “tumbles.” From a wider perspective, reports on the return of volatility to US and European markets highlight that changing conditions offer new, albeit risky, opportunities in short/long bets.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.