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Wed, 10 Feb 2010 | 03:04 GMT
Wed, Feb 10, 2010, 03:04 GMT
 

Investors drop large caps, KSE hit by selling spree

 Kuwait Times
 
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15 November 2009
KUWAIT: Kuwait Stock Exchange (KSE) was dramatically hit this week by a selling spree that was spread all across the market sectors. Investors dropping large capitalization stocks also weighted negatively on the index. As measured by Global's weighted General Index, the KSE was down by 5.54% percent at the end of the week and closed at 191.82 points, its lowest level since April 23. On a year-to-date basis, the index loss accelerated to 7.07 percent. Also, Kuwait Stock Exchange (KSE) price index was down for the week, dropping by 275.90 points (3.76 percent) to close at 7,058.20 points. The market capitalization reached KD31.04bn. Market breadth strongly skewed towards decliners this week as out of 160 shares traded, 123 shares retreated, against only 17 stocks recording positive performance.

Trading activity was lower this week as institutional investors kept away from the market waiting for the right time to enter. Total trading volume on the exchange was down by 17.15 percent, with 1.20bn shares changing hands at a total value of KD196.09mn (a drop of 10.52 percent from last week's value). High volume was seen in the Investment sector, accounting for 33.55 percent of the total traded volume this week with 404.15mn shares traded.

International Financial Advisors (IFA) was the most traded stock for the week with 131.40mn shares traded, accounting for 10.91 percent of the total traded volume. The scrip ended the week down by 7.06 percent at KD0.079. In terms of value traded, the Services sector took the lead, with a total traded value of KD54.97mn, accounting for 28.03 percent of the total market traded value. Large Capitalization Zain and Agility took the lead for the second in-terms of value traded, totaling KD23.47mn and KD15.49mn respectively. Both stocks ended the week down causing a big drop in Global Large Cap (Top 10) Index which shed 6.84 percent of its value.

All market sectors closed with negative performance. Global Food Index was the biggest loser for the second week, shedding a notable 19.90 percent of its value, dragged down by a 23.26 percent decline in its biggest component, Kuwait Foodstuff Company (Americana). Kout Food Group was the only gainer in the sector, adding 7.81 percent to its share value this week. Global Services Index was the second biggest loser. The index ended the week with 7.08 percent decline. The large Capitalization Companies such as, Zain, Agility and National Telecommunications Company (Wataniya) all ended the week with hefty losses causing the drop in the index level.

However, Al-Abraj Holding Company was the biggest loser in the sector, shedding 21.43 percent of its share value. The Industrial Sector came third in rank, losing 6.97 percent of its last weeks' value. Only two industrial companies ended the week up while Gulf Cables & Electrical Industries Company was the biggest loser in the sector, being down by 19.57 percent and making it to the biggest losers list this week. The same list was led by Wethaq Takaful Insurance Company who was the biggest loser this week, shedding 24.10 percent of its share value. On the other side, DAMAC Kuwaiti Holding Company topped the gainer list with an increase of 30.77 percent in its share price. The small capitalization companies recorded moderate losses with Global Small Cap (Low 10) index shedding 1.06 percent. While Islamic companies performance measured by Global Sharia-compliant Islamic Index were down by 4.18 percent.

Macroeconomic news
Kuwait logged a budget surplus of KD4.99bn ($17.5bn) in the first six months of its 2009/10 fiscal year on higher than forecast oil revenue, official data showed. Revenue of the OPEC member and the world's fourth-largest oil exporter stood at KD8.22bn at the end of September, about 112 percent of the forecast revenues for the whole fiscal year. Oil revenue came in at KD7.74bn and spending in the first six months to September 30 amounted to KD3.23bn, the data showed. The Gulf state's 2009/10 budget forecast a deficit of KD4.85bn, assuming its crude, the main revenue earner, would fetch $35 a barrel. Last month, a finance ministry officials said they expected a budget surplus of KD9.75bn in the 2009/10 fiscal year if oil prices remain at current levels.

The price of Kuwait crude reached $76.41 per barrel on Monday November 9, an increase of $1.76 per barrel from a week earlier, said Kuwait Petroleum Corporation (KPC). During the past week, the oil price reached as high as $77.49 on Thursday, November 5 before recoiling back to its current level. However, oil prices are in a state of recovery in general amid indications the global economy is improving, which means improved demand for oil. The current price of Kuwait's crude is a reasonable figure within th
e $70-80 per barrel range set by OPEC as desirable range.

Kuwait Petroleum Corporation (KPC) has lowered its offer for naphtha supplies lifting December 2009-November 2010 for the fourth time, by $1.00, to $13.00 a ton premium to Middle East quotes on a free-on-board (FOB) basis, traders said. The lower offer came despite Taiwan's CPC having accepted the higher price at $14.00 a ton premium, which other buyers including South Korea's Hanwha, YNCC, Japanese Mitsui Chemical and India's Haldia resisted. Usually KPC does not revise its offer as long as one buyer accepts a price, traders said. "But this time around, the resistance was rather strong, with highest bids capped at $12.00 a ton premium," said a trader.

Kuwait Petroleum Corporation (KPC) has terminated its one-year December-November naphtha contract with all Japanese buyers after a prolonged discussion over its offer, which was reduced to $13 a ton premium to Middle East quotes on a free-on-board (FOB) basis, traders said. These customers are Mitsubishi Chemical Corp, Mitsui Chemicals Inc, Idemitsu Kosan Company and Maruzen Petrochemical Company. The termination came shortly after trading houses Marubeni and Petro-Diamond, owned by Mitsubishi Corp, were dropped by Kuwait, traders said.

The latest Kuwait Oil & Gas Report from BMI forecasts that the country will account for 2.71% of Middle East (ME) regional oil demand by 2013, while providing 10.35% of supply. Regional oil use of 8.24mn barrels per day (bpd) in 2001 rose to 11.25mn bpd in 2008. It should average 11.30mn bpd in 2009 and then rise to around 12.17mn bpd by 2013. Regional oil production was 22.87mn bpd in 2001 and in 2008 averaged 26.29mn bpd. It is set to rise to 28.01mn bpd by 2013.

In terms of natural gas, the region in 2008 consumed 391.5bn cubic meters (bcm), with demand of 512.8bcm targeted for 2013, representing 31.0% growth.

Production of 389.5bcm in 2008 should reach 610.4bcm in 2013 (+56.7%), which implies net exports rising to 98bcm by the end of the period. Kuwait in 2008 consumed 3.27% of the region's gas, with its market share forecast at 4.93% by 2013. It contributed 3.29% to 2008 regional gas production and by 2013 will account for 3.16% of supply. For 2009 as a whole, BMI assumed an average OPEC basket price of $55.00 per barrel (bb), a 41.5% decline year-on-year (y-o-y). This represents an upgrade from the $52 forecast they had stuck with during the past three quarters.

The Organization of Arab Petroleum Exporting Countries (OAPEC) revealed in its monthly bulletin that Global Financial crisis has resulted in scrapping or delaying many energy, construction and infrastructural projects in Arab states. The international crisis impacted negatively on the economies of the Arab states as a result of the fall of oil returns and abstention of the banks from giving credits and facilities for economic activities. Inter-Arab trade, in 2008, reached approximately $82bn, much less than the figures posted in the years between 2004 and 2007.

Kuwait Petroleum Corporation (KPC) has approved the budget forwarded by the Kuwait National Petroleum Company (KNPC) for the fourth refinery and some fuel projects. KD4bn has been allotted to the fourth refinery project while KD8bn has been given for another fuel venture. The board is believed to be waiting for the approval of the Higher Council of Petroleum in order to launch the project.

Kuwait has lowered the official selling price (OSP) for its crude loading in December to Asian customers by 15 cents to 85 cents a barrel below the average of Oman/Dubai quotes, traders said. This was within the range of expectations in a Reuters survey for the December OSP.

© Kuwait Times 2009

 
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