21 March 2011
KUWAIT: The Kuwaiti bourse witnessed a high-level of selling pressure on the second trading day of the week following the escalation of tension in other GCC countries. Fear from additional drop in the regional stock markets prompted investors to cash out their investments to maintain the gains achieved during the previous four trading sessions. However, after three consecutive losing days interference from local government
funds helped slightly lifting up the market once again but leaving it in the negative compared to the week before. However, the announcement of the Capital Market Authority (CMA) bylaws coming into effective at the beginning of this week is expected to add more transparency to the market and encourage foreign investors to step in, which will reflect positively on the performance.
Looking at the Global General Index, which is a market weighted index it dropped by 2.12 percent this week and closed at 200.69 point. On a year-to-date basis, the index remained down by 10.22 percent. On the other hand, Kuwait Stock Exchange (KSE) price index followed the trend as it was also down by 0.36 percent (22.8 points) during the week and closed at 6,263.8 points. Investors' wealth deteriorated by KD705mn during the week as total market capitalization dropped to KD32.62bn. Market breadth was back
towards negative with only 45 stocks managing to end the week advancing against 78 stocks retreating out of 148 shares traded.
Not like the last week, trading activity started at high levels this time but gradually decreased throughout the week. However, it was still above last week's levels. Total trading volume reached 935.65mn shares changing hands, at a total traded value of KD173.73mn. Trading volume was the highest on the Investment Sector, accounted for 30.68 percent (287.05mn shares traded) of the total market volume. International Financial Advisors was the highest volume traded stock in the sector, with 61mn shares chang
ing hands. However, National Ranges Company topped the volume list for the week with 65.28mn shares traded.
On the value side, the Banking Sector remained on top of the value traded list, accounting for 32.55 percent (KD56.54mn) of the overall market traded value. Three banks were seen on the top value traded list this week. National Bank of Kuwait, Kuwait International Bank and Kuwait Finance House with KD18.78mn, KD17.30mn and KD12.42mn traded, respectively. However, the value list was headed by Zain with KD23.63mn traded. The scrip ended the week flat at KD1.360.
As measured by Global weighted sectoral indices, major financial indices were the biggest losers this week.
Global Banking Index was seen down by 3.67 percent after seven out of nine listed Kuwaiti banks ended the week at lower prices. While the Investment Index lost 3.25 percent of its value with only few gainers in the sector. Al-Deera Holding Company was the biggest gainer in the sector, adding 21.31 percent to its share value and made it to the top gainers list this week. The Services Index, which is the second biggest in market capitalization was also down by 0.61 percent. However, the sector had the biggest gainer this week among its constituent with Arabi Group Holding Company adding 24.53 percent to its share value and leading the gainer list.
On the other hand, smaller sectors managed to record gains during the week. Global Real Estate Index was up by 0.21 percent while the Food Index was the biggest gainer this time, adding 3.22 percent to its value. Global's special indices were all down. Global Large Cap (Top 10) index lost 2.65 percent of its value while Global Small Cap (Low 10) Index was seen down by 1.27 percent. However, Global Islamic Sharia Index was the biggest loser, being down by 3.34 percent this week.
Macroeconomic News
Kuwaiti inflation is expected to be between 5 and 6 percent this year, Central Bank of Kuwait's (CBK) Governor Sheikh Salem Abdul-Aziz Al-Sabah said, adding that interest rates are at a 'suitable' level. Kuwait's annual inflation eased to 5.2 percent in January from a nearly two-year high. Price pressure rose in Kuwait last year, led by food costs, pushing inflation to 6.0 percent in December, the highest rate in the oil exporting Gulf. "We expect inflation in
Kuwait in 2011 to reach 5 to 6 percent," the governor said at news conference. High global food prices, which helped trigger popular uprisings in several Arab countries, is one of the factors seen lifting inflation in the Gulf, which imports majority of its food, this year. Kuwait's key discount rate currently stands at 2.5 percent, after being cut from 3 percent on Feb 7, 2010. Sheikh Salem noted that current Kuwait interest rates are 'very suitable' also he sees no need to drop the peg and will stick to basket of currencies.
Governor of the Central Bank of Kuwait (CBK) Sheikh Salem Abdulaziz Al-Sabah said the economic performance in 2010 was so good that the country enjoyed the highest sovereign credit rating in the Middle East. "The country maintained good domestic and foreign balance surpluses particularly in terms of current account which constitutes a benchmark for economic indices," Sheikh Salem said. The investment spending in the current FY which ends in late March continued to grow, posting a 77 percent increase over the previous FY," he noted.
Sheikh Salem also said Kuwait's 2011 nominal gross domestic product (GCP) was expected to be 8.3 percent, after an expected 17.3 percent in 2010, based on IMF forecasts. In the first half of 2010, Kuwait's economy recovered at a slower pace than expected after shrinking 21.2 percent in nominal terms in 2009 due to weak oil prices, data showed last year.
The nominal GDP of Kuwait, the world's fourth largest oil exporter, dropped to KD31.5bn ($113.4bn) in 2009, from KD40.0bn in the previous year. The Central Bank of Kuwait (CBK) issued KD200mn worth of one-year treasury bonds on Wednesday, March 16, 2011, with a coupon rate of 1.25 percent. Bids for the bonds amounted to KD1,048mn, central bank data showed. The last issue was on March 09, for KD100mn, with 1.25 percent coupon, while bids for the bonds amounted to KD565mn.
Price of Kuwaiti crude oil retreated by $4.20 reaching $103.29 per barrels (pb) on Wednesday, March 16 compared to $107.49 recorded on Wednesday, March 9 as announced by Kuwait Petroleum Corporation (KPC). Crude prices dropped during the week amid gloomy expectations of the drop in demand of the globe's third largest consumer, Japan, which was recently affected by a catastrophic earthquake and tsunami. The natural disaster not only affected oil prices, but also led to a slump in global stock markets in lig
ht of a decrease in investor confidence towards taking risks.
Oil prices are sustainable at their current levels and there will be no need for OPEC to meet before June as prices are dropping, Kuwait's oil minister said this week. "The oil price is sustainable at this level, the price is falling so there's no need for OPEC to meet," said Sheikh Ahmad Al-Abdullah Al-Sabah, adding that Kuwait had not increased its output yet.
State-run Kuwait Petroleum Corporation (KPC) has signed a joint venture deal worth around $9bn to build an oil refinery and petrochemical plant in southern China. KPC and Sinopec, China's biggest refiner, are equal partners in the project. Earlier this month, China approved the $9bn joint venture, which will be built in the southern coastal city of Zhanjiang.
The project will secure Kuwait, the world's fourth-largest crude exporter, a solid outlet for its oil, ahead of competitors such as Venezuela, Russia and Qatar, all of which are planning refineries in China. Kuwait aims to more than double its crude exports to China to 500,000 barrels per day (bpd), versus last year's sales at just under 200,000 bpd. KPC in 2009 briefly tapped potential investors Shell and Dow Chemical Co but the companies did not make any commitment for a consortium.
Moreover, Kuwait Petroleum Corporation (KPC) bought one cargo of gasoline from Totsa in a tender last week, traders said. Kuwait is not a regular buyer of the motor fuel. KPC paid a premium of around mid $50s over the Middle East benchmark naphtha quotes in a deal it sealed last week. The cargo is for April-delivery, traders said. A standard gasoline cargo is 33,000 tons or around 280,000 barrels. The premium
was significantly below the market, traders said. "The gasoline market is oversupplied, which allows some very advantageous deals like this for the buyers" one gasoline trader said. Traders peg spot premiums for gasoline at around mid $80s over Middle East benchmark naphtha quotes.
Other Local News
On March 13th, Kuwait's Capital Market Authority (CMA) bylaws were published in Al-Kuwait Alyoum official government newspaper. This action constituted the official declaration that the CMA bylaws are now in effect. Further, the CMA reminded of this in a statement posted on the Kuwait Stock Exchange (KSE)website this week.
Although most laws are in effect as of March 13, the law provides a time frame of between 6 - 12 months for the KSE, brokerages companies, and investment companies to fully comply. For example, according to the bylaws of the CMA, the KSE will have to transform into a private company equally owned by listed companies through an auction and Kuwaiti citizens through a free public offering.
This process must be completed in the next 12 months. (Source: Local media) Kuwait is expected to spend at least KD5bn ($17.98bn) on development projects in the second year of its development plan, which was approved by parliament in early 2010. The Kuwaiti parliament's economic and financial committee has approved the second year's plan which will be referred soon to parliament for voting, Adel Al-Wugayan, secretary general of the country's supreme council for planning, said.
In the second year of the development plan, the focus will be on completing underway projects in addition to implementing other projects involving human development and spending will boost the local construction sector, he added.
Visiting officials of the Kuwait Fund for Arab Economic Development (KFAED) lauded this week the strong relations between Kuwait and Russia, stressing the fund readiness to increase joint investments with Russian companies. In a press conference held in Kuwait, KFAED Regional Director for Central Asia and Europe Youssef Al-Bader announced that the Kuwaiti fund is seeking to develop investment relations with Russia.
Kuwait Stock Exchange
Kuwait National Airways (Wataniya Airways) announced halting operations due to heavy losses and deteriorating security in the region. "The board has decided to cease all Wataniya Airways operations with the return of its last scheduled flight to Kuwait on March 16, 2011," said the board of directors in a statement. It said the move was caused by "the current financial situation of the company and the lack of fair trade requirements in the local market, as well as the difficult political and security situat
ion in the region.
As a result, the board has decided to call a meeting of the company's shareholders as soon as possible to discuss the future course of the company," it said. Kuwait's Agility and France Telecom are to acquire 44 percent stake in fast-growing Iraqi mobile operator Korek Telecom, the groups said in a joint statement this week. The two groups will form a joint venture, 54 percent-owned by Agility, to control the stake, they said. Agility will contribute existing convertible debt and will inject an additional $50mn for its 24 percent indirect stake.
Highlights
Assistant Undersecretary of the Ministry of Education Mohammad Al-Sayegh revealed that the tenders of a number of projects will be floated as part of the State Development Plan. Al-Sayegh said that 11 projects included in the list of priorities of the ministry will be offered in public tenders by the Central Tenders Committee.
Al-Sayegh said that the projects in clued the restoration of a number of schools and establishment of new ones, building and multi-store parking lots for educational zones, demolition of public libraries and building new ones, building a museum in Al-Riqei, building a sport complex for educational zones, accommodation for female teachers, three training centers, 10 bowling halls, 36 gyms and swimming pools.
said the move was in line with a strategy to expand in Africa and the Middle East, will pay $245mn for its 20 percent indirect stake in Korek and will also extend a $185mn four-year loan to the Iraqi operator. It can also exercise option to raise stake in Korek to 27 percent by 2014.
Kuwait International Bank is about to sign an agreement to offload its 11.25 percent stake or 11.8mn shares of Pearl of Kuwait Real Estate at a total value of KD2.19mn. Upon finalizing the deal, the lender is expected to generate nearly KD1.38mn net earnings. The bank will inform Kuwait Stock Exchange(KSE) management of relevant updates duly when the sale is completed and the final contract is inked.
Tamdeen Investment Company got the approval from the Central Bank of Kuwait (CBK) on March 13, 2011 to extend the period for buying back or selling 10 percent maximum of its issued shares for additional six months as of April 01, 2011. Al-Safat Energy Holding (SENERGY) said that the five rigs operated by its 60 percent-owned subsidiary National Drilling Company (NDC) - Egypt were unhurt by the current hostilities in Libya. However, they stopped operation due to current security conditions in the country.
KUWAIT: The Kuwaiti bourse witnessed a high-level of selling pressure on the second trading day of the week following the escalation of tension in other GCC countries. Fear from additional drop in the regional stock markets prompted investors to cash out their investments to maintain the gains achieved during the previous four trading sessions. However, after three consecutive losing days interference from local government
funds helped slightly lifting up the market once again but leaving it in the negative compared to the week before. However, the announcement of the Capital Market Authority (CMA) bylaws coming into effective at the beginning of this week is expected to add more transparency to the market and encourage foreign investors to step in, which will reflect positively on the performance.
Looking at the Global General Index, which is a market weighted index it dropped by 2.12 percent this week and closed at 200.69 point. On a year-to-date basis, the index remained down by 10.22 percent. On the other hand, Kuwait Stock Exchange (KSE) price index followed the trend as it was also down by 0.36 percent (22.8 points) during the week and closed at 6,263.8 points. Investors' wealth deteriorated by KD705mn during the week as total market capitalization dropped to KD32.62bn. Market breadth was back
towards negative with only 45 stocks managing to end the week advancing against 78 stocks retreating out of 148 shares traded.
Not like the last week, trading activity started at high levels this time but gradually decreased throughout the week. However, it was still above last week's levels. Total trading volume reached 935.65mn shares changing hands, at a total traded value of KD173.73mn. Trading volume was the highest on the Investment Sector, accounted for 30.68 percent (287.05mn shares traded) of the total market volume. International Financial Advisors was the highest volume traded stock in the sector, with 61mn shares chang
ing hands. However, National Ranges Company topped the volume list for the week with 65.28mn shares traded.
On the value side, the Banking Sector remained on top of the value traded list, accounting for 32.55 percent (KD56.54mn) of the overall market traded value. Three banks were seen on the top value traded list this week. National Bank of Kuwait, Kuwait International Bank and Kuwait Finance House with KD18.78mn, KD17.30mn and KD12.42mn traded, respectively. However, the value list was headed by Zain with KD23.63mn traded. The scrip ended the week flat at KD1.360.
As measured by Global weighted sectoral indices, major financial indices were the biggest losers this week.
Global Banking Index was seen down by 3.67 percent after seven out of nine listed Kuwaiti banks ended the week at lower prices. While the Investment Index lost 3.25 percent of its value with only few gainers in the sector. Al-Deera Holding Company was the biggest gainer in the sector, adding 21.31 percent to its share value and made it to the top gainers list this week. The Services Index, which is the second biggest in market capitalization was also down by 0.61 percent. However, the sector had the biggest gainer this week among its constituent with Arabi Group Holding Company adding 24.53 percent to its share value and leading the gainer list.
On the other hand, smaller sectors managed to record gains during the week. Global Real Estate Index was up by 0.21 percent while the Food Index was the biggest gainer this time, adding 3.22 percent to its value. Global's special indices were all down. Global Large Cap (Top 10) index lost 2.65 percent of its value while Global Small Cap (Low 10) Index was seen down by 1.27 percent. However, Global Islamic Sharia Index was the biggest loser, being down by 3.34 percent this week.
Macroeconomic News
Kuwaiti inflation is expected to be between 5 and 6 percent this year, Central Bank of Kuwait's (CBK) Governor Sheikh Salem Abdul-Aziz Al-Sabah said, adding that interest rates are at a 'suitable' level. Kuwait's annual inflation eased to 5.2 percent in January from a nearly two-year high. Price pressure rose in Kuwait last year, led by food costs, pushing inflation to 6.0 percent in December, the highest rate in the oil exporting Gulf. "We expect inflation in
Kuwait in 2011 to reach 5 to 6 percent," the governor said at news conference. High global food prices, which helped trigger popular uprisings in several Arab countries, is one of the factors seen lifting inflation in the Gulf, which imports majority of its food, this year. Kuwait's key discount rate currently stands at 2.5 percent, after being cut from 3 percent on Feb 7, 2010. Sheikh Salem noted that current Kuwait interest rates are 'very suitable' also he sees no need to drop the peg and will stick to basket of currencies.
Governor of the Central Bank of Kuwait (CBK) Sheikh Salem Abdulaziz Al-Sabah said the economic performance in 2010 was so good that the country enjoyed the highest sovereign credit rating in the Middle East. "The country maintained good domestic and foreign balance surpluses particularly in terms of current account which constitutes a benchmark for economic indices," Sheikh Salem said. The investment spending in the current FY which ends in late March continued to grow, posting a 77 percent increase over the previous FY," he noted.
Sheikh Salem also said Kuwait's 2011 nominal gross domestic product (GCP) was expected to be 8.3 percent, after an expected 17.3 percent in 2010, based on IMF forecasts. In the first half of 2010, Kuwait's economy recovered at a slower pace than expected after shrinking 21.2 percent in nominal terms in 2009 due to weak oil prices, data showed last year.
The nominal GDP of Kuwait, the world's fourth largest oil exporter, dropped to KD31.5bn ($113.4bn) in 2009, from KD40.0bn in the previous year. The Central Bank of Kuwait (CBK) issued KD200mn worth of one-year treasury bonds on Wednesday, March 16, 2011, with a coupon rate of 1.25 percent. Bids for the bonds amounted to KD1,048mn, central bank data showed. The last issue was on March 09, for KD100mn, with 1.25 percent coupon, while bids for the bonds amounted to KD565mn.
Price of Kuwaiti crude oil retreated by $4.20 reaching $103.29 per barrels (pb) on Wednesday, March 16 compared to $107.49 recorded on Wednesday, March 9 as announced by Kuwait Petroleum Corporation (KPC). Crude prices dropped during the week amid gloomy expectations of the drop in demand of the globe's third largest consumer, Japan, which was recently affected by a catastrophic earthquake and tsunami. The natural disaster not only affected oil prices, but also led to a slump in global stock markets in lig
ht of a decrease in investor confidence towards taking risks.
Oil prices are sustainable at their current levels and there will be no need for OPEC to meet before June as prices are dropping, Kuwait's oil minister said this week. "The oil price is sustainable at this level, the price is falling so there's no need for OPEC to meet," said Sheikh Ahmad Al-Abdullah Al-Sabah, adding that Kuwait had not increased its output yet.
State-run Kuwait Petroleum Corporation (KPC) has signed a joint venture deal worth around $9bn to build an oil refinery and petrochemical plant in southern China. KPC and Sinopec, China's biggest refiner, are equal partners in the project. Earlier this month, China approved the $9bn joint venture, which will be built in the southern coastal city of Zhanjiang.
The project will secure Kuwait, the world's fourth-largest crude exporter, a solid outlet for its oil, ahead of competitors such as Venezuela, Russia and Qatar, all of which are planning refineries in China. Kuwait aims to more than double its crude exports to China to 500,000 barrels per day (bpd), versus last year's sales at just under 200,000 bpd. KPC in 2009 briefly tapped potential investors Shell and Dow Chemical Co but the companies did not make any commitment for a consortium.
Moreover, Kuwait Petroleum Corporation (KPC) bought one cargo of gasoline from Totsa in a tender last week, traders said. Kuwait is not a regular buyer of the motor fuel. KPC paid a premium of around mid $50s over the Middle East benchmark naphtha quotes in a deal it sealed last week. The cargo is for April-delivery, traders said. A standard gasoline cargo is 33,000 tons or around 280,000 barrels. The premium
was significantly below the market, traders said. "The gasoline market is oversupplied, which allows some very advantageous deals like this for the buyers" one gasoline trader said. Traders peg spot premiums for gasoline at around mid $80s over Middle East benchmark naphtha quotes.
Other Local News
On March 13th, Kuwait's Capital Market Authority (CMA) bylaws were published in Al-Kuwait Alyoum official government newspaper. This action constituted the official declaration that the CMA bylaws are now in effect. Further, the CMA reminded of this in a statement posted on the Kuwait Stock Exchange (KSE)website this week.
Although most laws are in effect as of March 13, the law provides a time frame of between 6 - 12 months for the KSE, brokerages companies, and investment companies to fully comply. For example, according to the bylaws of the CMA, the KSE will have to transform into a private company equally owned by listed companies through an auction and Kuwaiti citizens through a free public offering.
This process must be completed in the next 12 months. (Source: Local media) Kuwait is expected to spend at least KD5bn ($17.98bn) on development projects in the second year of its development plan, which was approved by parliament in early 2010. The Kuwaiti parliament's economic and financial committee has approved the second year's plan which will be referred soon to parliament for voting, Adel Al-Wugayan, secretary general of the country's supreme council for planning, said.
In the second year of the development plan, the focus will be on completing underway projects in addition to implementing other projects involving human development and spending will boost the local construction sector, he added.
Visiting officials of the Kuwait Fund for Arab Economic Development (KFAED) lauded this week the strong relations between Kuwait and Russia, stressing the fund readiness to increase joint investments with Russian companies. In a press conference held in Kuwait, KFAED Regional Director for Central Asia and Europe Youssef Al-Bader announced that the Kuwaiti fund is seeking to develop investment relations with Russia.
Kuwait Stock Exchange
Kuwait National Airways (Wataniya Airways) announced halting operations due to heavy losses and deteriorating security in the region. "The board has decided to cease all Wataniya Airways operations with the return of its last scheduled flight to Kuwait on March 16, 2011," said the board of directors in a statement. It said the move was caused by "the current financial situation of the company and the lack of fair trade requirements in the local market, as well as the difficult political and security situat
ion in the region.
As a result, the board has decided to call a meeting of the company's shareholders as soon as possible to discuss the future course of the company," it said. Kuwait's Agility and France Telecom are to acquire 44 percent stake in fast-growing Iraqi mobile operator Korek Telecom, the groups said in a joint statement this week. The two groups will form a joint venture, 54 percent-owned by Agility, to control the stake, they said. Agility will contribute existing convertible debt and will inject an additional $50mn for its 24 percent indirect stake.
Highlights
Assistant Undersecretary of the Ministry of Education Mohammad Al-Sayegh revealed that the tenders of a number of projects will be floated as part of the State Development Plan. Al-Sayegh said that 11 projects included in the list of priorities of the ministry will be offered in public tenders by the Central Tenders Committee.
Al-Sayegh said that the projects in clued the restoration of a number of schools and establishment of new ones, building and multi-store parking lots for educational zones, demolition of public libraries and building new ones, building a museum in Al-Riqei, building a sport complex for educational zones, accommodation for female teachers, three training centers, 10 bowling halls, 36 gyms and swimming pools.
said the move was in line with a strategy to expand in Africa and the Middle East, will pay $245mn for its 20 percent indirect stake in Korek and will also extend a $185mn four-year loan to the Iraqi operator. It can also exercise option to raise stake in Korek to 27 percent by 2014.
Kuwait International Bank is about to sign an agreement to offload its 11.25 percent stake or 11.8mn shares of Pearl of Kuwait Real Estate at a total value of KD2.19mn. Upon finalizing the deal, the lender is expected to generate nearly KD1.38mn net earnings. The bank will inform Kuwait Stock Exchange(KSE) management of relevant updates duly when the sale is completed and the final contract is inked.
Tamdeen Investment Company got the approval from the Central Bank of Kuwait (CBK) on March 13, 2011 to extend the period for buying back or selling 10 percent maximum of its issued shares for additional six months as of April 01, 2011. Al-Safat Energy Holding (SENERGY) said that the five rigs operated by its 60 percent-owned subsidiary National Drilling Company (NDC) - Egypt were unhurt by the current hostilities in Libya. However, they stopped operation due to current security conditions in the country.
© Kuwait Times 2011
