Last year ended on a strong note for Gulf Cooperation Council (GCC) equity capital markets, with the fourth quarter being the best of the year as a total of five IPOs generated $1.03 bn, or 42 percent of the GCC’s annual IPO proceeds, according to a PwC report.
Although a positive end to the year, the final quarter of 2018 was still some way behind the eight IPOs and $2.46 bn posted in the same quarter of 2017.
Steve Drake, PwC Middle East capital markets leader, comments in a statement: ‘The final quarter of 2018 ended on a strong note for GCC equity markets despite ongoing macroeconomic and geopolitical uncertainties, which are expected to remain in the immediate future. As the market continues to adjust to this new norm, the opportunity lies in the hands of the companies that are able to adapt, innovate and compete against this still unfolding backdrop.’
The Qatar Stock Exchange saw its largest IPO by proceeds in four years, with Qatar Aluminium Manufacturing’s listing generating $758 mn – or more than 40 percent of the total proceeds raised in the GCC markets in 2018.
The Saudi Stock Exchange, Tadawul, continued to lead GCC stock markets, with the most active exchange by number of IPOs, while the Kuwait Stock Exchange performed strongly in terms of investment returns, possibly due to its inclusion in the FTSE Russell Emerging Market Index from September 2018.
Real estate investment trust (Reit) IPOs experienced a strong start in the first half of 2018, generating a total of $1 bn, representing 47 percent of the total GCC IPOs in 2018. But demand for Reit IPOs cooled in the second half of the year due to a slowdown in the real estate sector across the region and declining spreads between returns on Reits and deposit rates for safer time deposits.
Saudi Arabia was the largest sovereign bond issuer of the year, at a total of $14.2 bn. The largest corporate bond issuer of Q4 2018 was Sabic Capital II, at $2 bn.
The decision to include GCC nations in the JPMorgan Emerging Market Bond Index from January 2019 and the ascending tendency of oil prices are likely to have contributed to the overall GCC performance and boosted the issuance of GCC debts in 2018.
