June was a “mixed” month for Mena indices, post-Brexit, Kuwait Financial Centre (Markaz) said in its latest monthly market research report.
It said most Mena markets ended the month in red, barring Abu Dhabi (5.8%), Qatar (3.6%), Saudi Arabia (0.8%) and Bahrain (0.6%). 
Trading activity was relatively quiet as the month of Ramadan witnessed a lull, and anticipation regarding the Brexit outcome led to investors observing from the sidelines. 
Kuwait price and weighted index ended the month in red, with the former losing 0.7%, and the latter declining 1.7%, and Kuwait stock market’s weak performance continued in the second quarter of 2016, as the country’s trade surplus continued to be squeezed by low oil price. 
Egypt was the worst performer in June, losing 6.5% over previous month’s close, as the currency crisis continues to plague the country. 
S&P GCC rose marginally by 1.1% in June, to close at 91 points. Global investor reaction to the Brexit outcome had unnerved GCC investors, and speculation over a possible contagion in Europe had led to panic driven trading in the last two weeks of June. 
Investors have become more risk averse as uncertainty continues to plague global markets. 
In terms of valuation, P/E of Morocco (16.8x), Jordan (14.2x) and Kuwait (13.5x) markets were the premium markets in the Mena region, while the markets of Dubai (8.2x), Bahrain (9.2x), and Egypt (9.6x) were the discount markets. 
Blue chips had a mixed June, with National Bank of Abu Dhabi (UAE) and Saudi Electric (SEC) ending the month at the top, gaining 23.8% and 18.3%, respectively. 
National Bank of Kuwait and Kingdom Holdings (KSA) witnessed a slump, losing 6.3% each in June. The boards of directors at National Bank of Abu Dhabi and First Gulf Bank have recommended merging the two lenders, which will create a regional powerhouse with $175bn in assets. 
The merger is part of Abu Dhabi’s plan to create a bank that could compete in size with regional giants, such as QNB. 
Saudi Arabia’s state electricity utility, SEC, sought bids from international developers to build two solar-power plants in the kingdom’s northern region. The plants will each generate as much as 50 megawatts using photo-voltaic technology, which produces power directly for solar cells.  
The outcome of the vote and the resultant decision of Britain to leave the European Union (EU) caught the financial markets by surprise, Markaz said. The broad sell-off across continents and asset classes could be because of misplaced initial expectations for a “Remain” victory. 
GCC markets remained relatively unscathed except for UAE markets; Dubai index lost 3.3% while Abu Dhabi lost 1.8%. Dubai being largely a service economy driven by trade & services, tourism and real estate witnessed a fall as British pound lost 7.2% in value against UAE dirham.
The impact on oil would be minimal since Britain consumes only 1.6% of global consumption and ranks 15 among global consumers. The more serious impact would be if there is contagion to the rest of the European Union. 
Imports from the UK will become cheaper, such as cars, capital equipment etc. Sovereign Wealth Funds (SWFs) and HNIs in GCC are known to invest heavily in London’s real estate. Investors from the UAE accounted for more than 20% of buy-to-let property sales in the UK in 2015. 
On the other hand, a steep fall in real estate prices in Britain (especially London) may also see fresh investments from GCC into the country because of bottom fishing.
GCC region has been in talks with EU region for over 25 years and the Free Trade Agreement (FTA) between the regions is still pending. 
Having lost of access to EU, Britain to sustain its exports would be aggressive to sign bilateral trade deals. 
This presents an opportunity for GCC regions, especially Dubai, as it acts as a trading hub for Mena region as well as a gateway for African continent.