This week in MENA "22 May 2026" Peace

Research evidence excerpt

This week in MENA "22 May 2026" Peace

This week in MENA UBS Research

UBS Research

Figure 1: Chart of the week: Most MENA sectors delivered positive Q1 surprises

onSource:revenueBloombergand/orL.P. Basedprofit,on overdespite90 stocks inlimitedthe S&P GCCdowngradesComposite withforBloombergthe conflictChartconsensus estimates

Our chart of the week is from this week's MENA's 1Q26 earnings wrap, which

highlights that looking at 1Q26 revenue and earnings surprises versus Bloomberg

consensus, and considering that MENA stocks did not see significant earnings

downgrades ahead of reporting, the outcome was quite resilient. Most sectors reported

revenue and/or earnings surprises, with Transport, Energy, Utilities and Chemicals

among the leaders. Among the laggards were Capital Goods, Financial Services

(exchanges), Metals & Mining, and Healthcare.

EM & APAC Equity Strategy: How much to worry about rising US yields

US 10y nominal yields have seen a sharp rise recently - up 27bps in about a month -

equivalent to a 0.6 SD event. Our analysis leads us to believe that US real rates (the part

of US yields that do matter) are important, and are a drag on EM returns if rising. But the

relationship has weakened and is not as strong as it is for the US market itself. Looking at

factor cuts, PE/PBV/Div.Yield factors are most sensitive (i.e. cheaper stocks on these

metrics outperform), while balance sheet leverage and quality measured as ROE are less

sensitive. Among markets, Australia, South Africa, Korea and Japan are more

vulnerable, while Saudi Arabia and Indonesia are less sensitive. In fact, local yields

appear to matter more than US yields for EM returns post Covid (possibly since the more

influential investor for EM of late is sitting domestically, rather than outside EM). Here,