Dow Jones Islamic Market Indexes in July: Kuwait's Comeback

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July was the month of turnarounds, although stock market performances were volatile in the East and West. Perhaps the most surprising move of the month came from the Kuwait Stock ExchangeKuwait Stock Exchange (KSEKSE).

The KSEKSE has been the long time problem child of the Gulf Co-Operation Council (GCC), the economic and political union of which Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman are members. Its results have been less than stellar for some time and have consistently lagged its GCC neighbors.

The Dow Jones Islamic Market (DJIM) Kuwait Index ended 8.51% higher at 883.82 points (as of the close of trading of July 26^th). The northern Gulf State benefited from advancing oil prices and remarks made by the International Monetary Fund (IMF) that Kuwait's economic outlook, shattered in 2009 by low energy prices and political uncertainty, is overall positive regarding the second half of 2010. The price for the "black gold" surged during the last three weeks by 8% to around US$78 per barrel, pushing the DJIM Oil and Gas Index up by 9.91% to 3,150.62 points, the highest DJIM sector index profit in July. An astounding 90% of Kuwait's national budget is based on oil-related revenues.

The DJIM Kuwait Index was only topped by the DJIM China Offshore Index, which jumped 10.16% higher at 2,746.52 points. The third highest gainer was the DJIM Europe Titans 25 Index (up 8.13% at 1,905.04 points).

Two Islamic composites which retreated slightly were the DJIM India Index (down 0.76% at 1,863.82 points) and the DJIM Philippines Index (1.25% lower at 1,524.50 points). On the other hand, all DJIM industry indexes gained territory in July.

Meanwhile, the Islamic Finance industry extends its period of consolidation and careful expansion. Kuwait's largest Islamic bank, Kuwait Finance House (KFH) is eyeing setting up branches in the U. S., Canada and China.

"We see new optimism in the Middle East," says Imad Ghandour, Executive Director, Private Equity at Gulf Capital in Abu Dhabi. According to Ghandour, PE firms in the Middle East and North Africa raised an impressive US$1.25 billion in the first quarter of 2010, an 18% increase over all of 2009, as regional economies recovered and investor appetite returned.

"But investors do not look for excessive rate of returns in short time periods anymore. They look for sustainable projects and assets with quality", continues Mr. Ghandour, explaining the new paradigm.

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Gérard Al-Fil is a financial journalist in Dubai. He works as a Middle Eastern correspondent for the Swiss financial website moneycab.com, for Dubai-based portal AME Info, for the Swiss banking magazine 'Schweizer Bank' and for the German weekly 'Euro am Sonntag'. He reported from the UAE, Kuwait, Bahrain, Qatar, Oman, Turkey, Iran and China. Gérard holds a diploma in business administration from University of Duesseldorf and a post-graduate diploma from the Institute of Islamic Banking and Insurance (IIBI) in London.

© Press Release 2010