The stockmarkets of the MENA region returned a mixed performance in relatively quiet trading in July as the holy month of Ramadan came to an end with the Eid Al-Fitr holiday. Modest gains in Saudi Arabia and the United Arab Emirates were countered by some weakness in Egypt, where the local currency suffered a devaluation of around 3%, and Qatar.
Even though underlying markets were little changed overall, the Magna MENA Fund made further strong gains in July. This performance was again due to stock selection within the portfolio, especially amongst companies in Egypt, Saudi Arabia and the United Arab Emirates.
Several of the Fund’s largest holdings again added significant value. These included the leading Saudi general insurer Tawuniya, whose share price put on 16% following a reported 36% rise in net profit over the year to the first half of 2015. Gross written premiums rose 20% whilst net claims rose only 5% over the period. Saudi health insurer Bupa Arabia also produced a strong set of results that were well received by the market, with its share price rising 14%. Elsewhere, NMC Healthcare, the UAE-based private hospitals group listed in London, also made a strongly positive contribution to performance with its share price 11% higher as the market continued to price in the beneficial impact of the USD 415m spent on four acquisitions so far this year.
Mezzan, the Kuwaiti consumer goods group which came into the portfolio in June following an IPO, released its first set of results as a listed company. Net profit rose by 46% over the year to the first half of 2015, supported by strong growth across all business lines throughout the Gulf. Although the numbers were somewhat flattered by the timing of Ramadan and a one-off insurance settlement, underlying profit still rose 15%. The Mezzan share price was also 15% higher on the month.
Although most holdings in the portfolio generated a positive return in July, the Saudi healthcare group Dallah Health saw its share price fall 10% after its latest results missed expectations. Net profit rose by 5% over the year to the second quarter, held back by the costs associated with its expansion plans. As new facilities come on stream earnings can however be expected to resume their strong growth path.
Akhilesh Baveja, Magna MENA Fund