The MENA region had a good quarter, gaining over 4% as Kuwait (+12%) and Saudi (4%) drove the main index higher. However, relative to emerging markets, MENA continued to lag for the quarter and closed the year 2019 trailing the MSCI EM index, 19% vs 13%.

The Saudi market started the quarter on a sour note, as investors were raising assets in preparation of the Aramco IPO. They were not disappointed as the company shot through the $2 trillion mark just days after the IPO, pulling the whole market higher. The Tadawul market is looking a bit expensive but should be supported with continued foreign flows due to increasing index allocation.

The most attractive market from a valuation perspective at the moment is UAE. Kuwait has the strongest momentum which could continue into mid 2020 as it will be boosted with a long awaited MSCI EM status in 2020. Main risks for 2020 remain high geopolitical tensions in the region and increased correlation with global equity markets.

Domicile: Malta
Sources: Bloomberg LP