Rasmala GCC Islamic Equity Income Fund – GCC equities declined heavily in August

27th September 2015

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Market Performance of Rasmala GCC Islamic Equity Income Fund for August 2015

Article Overview

1 Market Performance of Rasmala GCC Islamic Equity Income Fund for August 2015

In what can be marked as one of the most volatile months, GCC equity markets reversed their direction and declined heavily in August. Saudi Arabia, Dubai, Oman, Abu Dhabi, Kuwait and Qatar all fell with negative returns of -17.32%, -11.60%, -10.47%, -7.04%, -6.93% and -1.88%, respectively.

The Fund declined by -10.56% against the benchmark contraction of -14.74%. This month’s outperformance was mainly the result of our allocation to securities in Saudi Arabia and the UAE. In sector terms, our relative allocation to Materials, Banks, Telecoms, Real Estate and Capital Goods positively affected our performance, while our relative allocation to Healthcare, Commercial and Professional Services, Energy, Retailing, and Pharmaceuticals sectors had contributed negatively to our performance. Our underweight positions in SABIC, Al Rajhi Bank, Ma’aden, Mobily and SAVOLA had positive contributions to the relative performance. The overweight in Saudi Airline Catering, Aldrees Petroleum, NMC Health, Al Tayyar Travel and Al Mouwasat Hospitals proved a distraction in the returns context.

Market Outlook

A weaker global demand outlook signalled by the Chinese Yuan devaluation and continued oil price volatility should continue to weigh on investors’ sentiment.