Volatility takes a bite out of earnings: The top 3.5k listed companies globally, with over USD 1 bn in annual revenue, have lost some USD 320 bn in earnings since 2017 due to geopolitical tensions and economic uncertainty, the Financial Times reported yesterday, citing an EY-Parthenon study. One in four of the 3.5k companies saw a 5% decrease or more in EBITDA margin in the period between 2017-2024.

The impact of volatility was also illustrated by the UK’s FTSE 100 index, where the study found that 40% of price fluctuations occurred on the days of major geopolitical and economic events — concentrated over the past three years — including the US inflation rebound, Russia’s war on Ukraine, the UK gilt market meltdown, the Israel-Hamas war, and Donald Trump’s return to the White House.

“After years of cheap money and relative geopolitical stability, a wave of macro shifts — from trade tensions to global conflicts — now means that government policy and global events are having a greater impact on value and profits than in many decades,” EY-Parthenon UK’s macro and geostrategy leader Mats Persson told the salmon-colored paper.

Chinese corporates took the hardest hit, with 40% of 833 companies surveyed losing a combined USD 73 bn of EBITDA, with losses concentrated in the real estate, steel, and construction sectors.

Against the headwinds: Many American and British companies managed to go against the current and post EBITDA far above their peers, including US’ Caterpillar, UPS, Pfizer, Merck, and Johnson & Johnson, and the UK’s Next, Croda, Rio Tinto, and Spirax.

Adaptability is key: Those top performers were the ones who “have successfully diversified their portfolio, managed their cost base, identified and understood various policy changes and updated their governance to reflect a different world,” Persson said.

MARKETS THIS MORNING-

Asian markets are little changed in early trading this morning, with Japan’s Nikkei up 0.1%, while Hong Kong’s Hang Seng and the Shanghai Composite are both down 0.1%. Wall Street futures are also holding steady, after the S&P 500 notched another record high yesterday, shrugging off the Trump administration’s tug-of-war with the Fed.

ADX

10,235

-0.3% (YTD: +8.7%)

DFM

6,045

-0.8% (YTD: +17.2%)

Nasdaq Dubai UAE20

5,010

-1.1% (YTD: +20.3%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.3% o/n

4.2% 1 yr

TASI

10,981

+0.2% (YTD: -8.9%)

EGX30

32,130

+0.2% (YTD: +14.7%)

S&P 500

6,306

+0.1% (YTD: +7.2%)

FTSE 100

9,013

+0.2% (YTD: +10.3%)

Euro Stoxx 50

5,343

-0.3% (YTD: +9.1%)

Brent crude

USD 69.21

-0.1%

Natural gas (Nymex)

USD 3.32

-0.2%

Gold

USD 3,414

+0.2%

BTC

USD 117,550

0.0% (YTD: +25.7%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.61

-0.3% (YTD: +1.2%)

S&P MENA Bond & Sukuk

145.72

0.0% (YTD: +4.1%)

VIX (Volatility Index)

16.65

+1.5% (YTD: -4.0%)

THE CLOSING BELL-

The ADX fell 0.3% yesterday on turnover of AED 1.2 bn. The index is up 8.7% YTD.

In the green: Abu Dhabi National Takaful Co. (+14.9%), E7 Group Warrants (+14.8%) and E7 Group (+14.7%).

In the red: Oman & Emirates Investment Holding Co (-10.0%), Ins. House (-9.9%) and Adnoc Gas (-2.4%).

Over on the DFM, the index fell 0.8% on turnover of AED 764.3 mn. Meanwhile, Nasdaq Dubai was down 1.1%.

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