The equity markets in the Middle East and North Africa rose 3.2 per cent in August bringing their total gains to date in 2009 to 19.9 per cent, according a report by Rasmala, a leading regional investment bank headquartered in Dubai.

Egypt emerged out as the top performing Arab market in August with 8.9 per cent gain and also maintained its position as best Arab market for the year to date with a 46.3 per cent, the report said.

The Mena equity markets outperformed the emerging markets but have underperformed the US markets for the month.

The first half earnings in 2009 for Mena markets indicate that earnings have yet to recover from the severe fall in earnings witnessed in the last quarter of 2008 – a result of the global financial crisis, Rasmala stated in the report.

Generally, the first half earnings for companies in the UAE and Saudi Arabia were down 40 per cent compared to the same period last year.

'Qatar has been more resilient with earnings only down by 10 per cent, while Egyptian companies' earnings declined by close to 35 per cent in the first half this year.'

Compared to the last year Q2 earnings, Egypt and the UAE declined by 2 percent and 12 per cent respectively, while Qatar rose by one per cent. Saudi Arabia however reported a 46 per cent jump in earnings mainly as both Sabic and Saudi Electricity Company resumed creating profits, the Rasmala report said.

The Saudi Tadawul was the worst performing GCC market in August and was the only GCC market to record a decline during the month.

The downtrend impacted all sectors including banks, petrochemicals, telecoms and real estate. This weak market performance occurred despite the top 70 companies on Tadawul reporting a 46 per cent rise in earnings compared to previous quarter.

The earnings in H1 09 is still 42 per cent lower when compared to the same period last year. Concerns over Saudi banks' exposure to the troubled Saudi firms had a negative impact on banks' share price performance.

All listed Saudi banks, with the exception of Al Rajhi and Saudi Investment Bank, experienced a decrease in their share price during the month. The two troubled Saudi firms are estimated to have borrowed approximately $5 billion from Saudi banks.

The UAE market gained 5.8 per cent during the month led by Emaar Properties which rose 26.6 per cent despite reporting a net loss of  Dh1.29 billion in second quarter.

This quarterly loss was a consequence of the entire write off of its US subsidiary. Excluding the write off, Emaar had a strong quarter beating consensus estimates by around 50 per cent with higher than expected unit handovers.

Shuaa Capital was another top performer as it gained 24.5 per cent during the month. The company reported a 37 per cent rise in its second quarter net income, appointed a new CEO and received approval to redeem its convertible bond by issuing new shares to Dubai Banking Group, said the report.

Total Q2 earnings for the largest 70 listed UAE companies fell by 47 per cent compared to previous year and fell by 8.2% compared to previous quarter. The fall in earnings compared to the previous quarter was mainly due to losses reported by Emaar Properties and Union Properties.

Globally, the S&P 500 gained 3.4 per cent in August as reports indicate that consumer confidence and home sales exceeded economists’ forecasts.

This is the sixth consecutive monthly gain, the longest series of increments since January 2007. Oil rose in the first three weeks of the month to reach a new high of $74.8 per barrel before falling sharply in the last week to close at $69.2 per barrel, the report added.-TradeArabia News Service