01 March 2010
KUWAIT: The Kuwait Stock Exchange (KSE) closed the month of February 2010 with notable gains reaching 13.21 percent. The market reached its highest level since October 27, 2009 on February 22 before losing some of its base ahead of the extended holiday. As measured by Global's weighted General Index, the Kuwaiti market closed the week up by 0.16 percent at 205.05 point. The index gains for the year reached 10.11 percent on a year-to-day basis. On the other hand, Kuwait Stock Exchange (KSE) price index moved in the other side, ending the week down by 17.70 points (0.24 percent) and closed at 7,378.8 points as some of the highly prices equities concluded the week with a negative note overweighing the smaller prices stocks.
The market capitalization reached KD33.52bn. Market breadth was skewed towards decliners as out of 169 shares traded this week, 77 shares declined against 63 advancing. Trading activity gradually went lower as the holiday comes closer. Total traded volume during the four trading days of this week reached 1.80bn shares changing hands with a total traded value reaching KD300.85mn. High volume was seen on the Investment sector, accounting for 31.09 percent of the total traded volume this week with 560.20mn shares traded. Three of the investment companies made it to the highest volume list with Al-Deera Holding Company being the most traded among those with 62.98mn shares traded. However, on top of the list came National Ranges Company with 100mn shares traded accounting for 5.55 percent of the total traded volume in the market.
On the value list, the Services sector took the lead, with a total traded value of KD112.50mn, accounting for 37.40 percent of total market value. Zain, the largest listed company in the Kuwaiti bourse, topped the traded value list for the third week, with a total traded value of KD43.57mn. The heavyweight scrip closed flat at KD1.280. Agility, another large cap company in the sector, followed with KD17mn traded.
Agility's scrip closed 10.14 percent lower at the end of the week. Global Industrial index was the biggest gainer, adding 1.79 percent with several large capitalization industrial stocks ending the week with gains. However, percentage-wise, Gulf Rocks Company made it to the top gainers list with its share price rising by 18 percent. The company announced this week its intention to distribute 10 percent cash dividends and 10 percent bonus shares for its shareholders, despite recording loss for the year 2009, subject to the AGM approval.
The banking sector was a prominent mover of the market this week as Global Banking Index added 1.09 percent to its value. Five of the Kuwaiti banks closed higher with Gulf Bank being the biggest gainer in the sector, adding 7.94 percent to its share price. The scrip recorded its highest level since last October 2009. On the other hand, the food sector was the biggest loser for the week with Global Food Index closing down by 4.14 percent with its biggest component, Kuwait Foodstuff Company (Americana) losing 4.76 percent of its share value while Danah Al-Safat Foodstuff Company was the biggest loser in the sector, shedding 9.80 percent of its share value.
Global Services Index came second, shedding 0.98 percent of its value as most of its large capitalization stocks closed down for the week. In the same sector, Arabi Group Holding Company and Mubarrad Transport Company topped the biggest gainers list adding 31.75 percent and 24.14 percent, respectively to their share price and helped limiting the sectors' loss. On the losers list, Al-Madar Finance & Investment Company and Al-Themar International Holding Company topped the list, losing 15.63 percent each.
Global's special indices ended on mixed notes. Global Large Cap (Top 10) Index was down, shedding 0.18 percent of its value. Global Islamic Sharia Index was also down by 1.13 percent while Global Small Cap (Low 10) index closed marginally up by 0.04 percent.
Macroeconomic News
Kuwait's exports to the 27-member European Union in 2009 totaled 2.844bn euro and imports from the EU were valued at 3.708bn euro leaving a trade balance of 863mn euro in favor of EU, according to figures published by Eurostat, the EU's statistical bureau. EU-Kuwait trade flows in 2009 compared with the figures of 2008 noted a sharp decline.
Kuwaiti exports to the EU in 2008 totaled 5.222bn euro and imports from the EU totaled 4.603bn euro leaving a balance of 619mn euro in favor of Kuwait. Crude oil was the main export item from Kuwait to the EU and in lesser quantities food products and chemicals. Machinery, manufactured products, chemicals, food and beverages are the main exports of EU countries to Kuwait. In 2009, trade balance with a few EU countries, the Netherlands, the UK, and Spain was in favor of Kuwait.
Oil related news
Kuwait Petroleum Corporation (KPC) has offered 80,000 tons of the cracked 380-centistoke (cst) fuel oil for March loading, its first parcel for the month, after selling three lots, totaling 240,000 tons for February loading, traders said. Offers for the cargo, for March 12-13 lifting from Shuaiba, were expected by February 22, with validity through the same day. KPC last sold two 80,000-tons parcels of the same oil grade for February loading. The first lot for lifting on February 11-15 was awarded to Middle East trader Bakri at a premium of around $12-13 a ton to Middle East spot quotes, on a free-on-board (FOB) basis. The second parcel for February 16-20 loading was sold to Glencore at an undisclosed premium.
Asian fuel oil fundamentals have weakened since the beginning of the month, largely on expectations of heavier supplies from the West in March.
Kuwait Gulf Oil Company (KGOC) expects oil production from the Al-Khafji oilfield to reach 300,000 barrels per day (bpd) by the end of the first quarter, its managing director said. "The company is working on a big number of exploration and drilling operations in the divided zone to reach the set goals of the firm and its Saudi partner," Bader Al-Khashti was quoted saying. Kuwait's current oil production from the field is at 272,000 bpd, Khashti said. Khafji, which is in the Neutral Zone between Kuwait and Saudi Arabia, has oil production capacity of around 550,000 bpd. Both countries plan to boost capacity in the zone to 700,000-900,000 bpd by 2030. Current gas production from Khafji is between 60mn to 70mn cubic feet per day, equally divided between the two countries, he said.
The OPEC member aims to reach an oil production capacity of 4mn bpd in 2020 and sustain it until 2030, Oil Minister Sheikh Ahmad Al-Abdullah Al-Sabah said last year. Kuwait's state-run Petrochemical Industries Company's (PIC) planned petrochemical plant will cost about $5bn, a PIC official said. The figure he gave is $2bn higher than an estimate given last month in an Oil Ministry publication. The plant will produce over 1mn tons per year of ethylene and is expected to be operational by 2015, Yousef Al-Atiqi, PIC deputy managing director for olefins, said at a media event. He said the project would cost around $5bn.
The plant would be the firm's third olefins complex, Atiqi said. Shareholders are not yet finalized and the project is still at a "preliminary studies phase", he added. Last year, Atiqi said that PIC was planning to shut its fertilizers business and focus on its more profitable petrochemicals division. PIC's current capacity at olefins I and II is about 1.65mn tons per year of ethylene and its derivatives.
Other local news
Standard & Poor's (S&P) rating agency said this week that Banks in Kuwait and Dubai will endure a tougher 2010 than their Gulf peers as lenders in the region continue to take provisions against bad credit, which will weigh on their financial performance. On the Kuwaiti banks the rating agency said that they are suffering from a domestic real estate slump and analysts expect credit conditions to remain difficult in the next 18 months. Moody's also said that it has a negative outlook for the Kuwaiti banks, warning that the economy, despite large-scale government stimulus plans, remains undiversified and relies too heavily on its oil sector.
KGL Ports International Warehousing and Transport Company (KGLPI) announced the launch of its capital increase through the Private Placement Offering of 150mn new shares. Details of the capital increase will be revealed at a press conference to be held on March 2, 2010 at the KGL Holding Auditorium. In 2009, the total number Private Equity transactions in the MENA region has decreased significantly by almost 71% to 15 entry transactions compared to 51 for the same period last year. On the fundraising front, the year saw only two funds successfully raised. Despite the challenging environment that faced the MENA region in general, the MENA region will remain one of the fast growing.
This will reflect positively on the future outlook of the private equity sector. However, the fundraising is likely to continue to go on a slow pace in 2010 because private equity houses will focus more on deploying the dry powder available in the region. Deal flow will start to increase in 2010 supported by the opportunities available in the defensive sectors. We believe that the IPO market will improve. Nonetheless, it will not be the primary exit route for private equity houses. Private equity houses will be exiting their investments through trade sale which will expose the MENA private equity sector to more interesting exits structure.
Oil market
Oil prices witnessed a W-shaped trend as flow of both positive and negative news pulled oil prices in opposite directions. US crude increased by 5.3% during the review period (22 Jan 10-19 Feb 10) to settle at $79.81 per barrel mark. Debt crisis in Greece and concerns of contagion to other European economies dampened investor sentiments and raised questions over the effectiveness of the currency and economic union. The fears were allayed to a certain extent as the European countries pledged their support to Greece without giving much details on the kind of support.
Oil prices rallied in the last two weeks of the review period as US non-core inflation declined by 0.1% indicating that Fed is unlikely to face pressure to increase the interest rates in the short-term. In addition, larger than expected declines in US end-product stocks, strikes at French refineries and geo-political situation in the Middle-East provided support to oil prices. OPEC basket and Kuwait export crude price followed the same pattern increasing by 0.8% and 3.2% during the review period to settle at $75.17 and $76.09 per barrel respectively.
Kuwait Stock Exchange
Global Investment House played a major role in bringing the two parties together to the negotiating table in the deal between Zain Africa and Bharti Airtel. Bader Al-Sumait, CEO at Global said that the Kuwaiti market might witness more acquisitions similar to the Zain deal, as well as the acquisition of a bank. He expressed his full confidence that the deal between Zain Africa and Bharti Airtel will be concluded. Global's Investment Banking Division has successfully managed to become the Regional Advisor for Bharti Airtel and participate in this major deal which is considered one of the largest deals in the world amounting to $10.7bn, Al-Sumait stated.
Shareholders of the National Bank of Kuwait (NBK) will vote on a 10 percent capital raise on March 7, the bank announced as the general assembly meeting was set on that date. The bank had said the move was intended to support its strategic expansion plans. Shareholders will decide on a rights issue at a price of 500fils per share including premium. NBK will raise its capital by KD29.73mn ($102.9mn), to KD359.79mn, according to an ad released on that regards.
Kuwait Finance House (KFH) said it plans to increase its capital by eight percent to KD248.98mn ($861.5mn). The capital hike will take place through distributing bonus shares worth KD18.44mn to its shareholders, KFH said. KFH's shareholders will vote on the capital hike plan on March 8.
Highlights of the week
The good Kuwaiti-Syrian relations positively reflected on the economic ties and investments between the two countries, resulting in high figures and constant progress. Economic cooperation between Kuwait and Syria is based on a number of agreements that encouraged the protection of investments, the prevention of double taxation, and increasing trade exchange. Kuwait is one of the first countries to invest in Syria. It established Kuwait united investment company in Syria with a capital of $200mn and established a number of commercial banks like Gulf Bank and Cham Islamic Bank. Kuwait is currently ranked third, after Saudi Arabia and Turkey, in volume of foreign investments in Syria. In 2005, Syrian exports to Kuwait came to about $36mn and trade exchange between Syria and Kuwait reached $345mn. Between 2005 and 2006, Syrian exports to Kuwait made up 35 percent of the country's exports.
India's Bharti Airtel has lined up $9bn in loans from foreign and local banks for its planned acquisition of the African assets of Kuwait's Zain. The newspaper cited three people familiar with the matter as saying nearly a dozen banks - mostly foreign - had come forward to commit the amount in long-term loans, compared with earlier plans of taking short-term or bridge loans. Standard Chartered is leading the consortium of banks and has alone committed $5.5bn. The pricing for the 7-year loan could be close to 300 basis points over the London inter-bank offered rate. Barclays has also committed close to $5bn to the company, the source said. Foreign banks including ANZ, BNP Paribas, Citi, DBS, Bank of Tokyo Mitsubishi UFJ and JPMorgan were likely to be part of the overseas syndication. Among Indian banks, the State Bank of India and Kotak Mahindra Bank, besides some state owned banks, also want to partner in this deal.
© Kuwait Times 2010
KUWAIT: The Kuwait Stock Exchange (KSE) closed the month of February 2010 with notable gains reaching 13.21 percent. The market reached its highest level since October 27, 2009 on February 22 before losing some of its base ahead of the extended holiday. As measured by Global's weighted General Index, the Kuwaiti market closed the week up by 0.16 percent at 205.05 point. The index gains for the year reached 10.11 percent on a year-to-day basis. On the other hand, Kuwait Stock Exchange (KSE) price index moved in the other side, ending the week down by 17.70 points (0.24 percent) and closed at 7,378.8 points as some of the highly prices equities concluded the week with a negative note overweighing the smaller prices stocks.
The market capitalization reached KD33.52bn. Market breadth was skewed towards decliners as out of 169 shares traded this week, 77 shares declined against 63 advancing. Trading activity gradually went lower as the holiday comes closer. Total traded volume during the four trading days of this week reached 1.80bn shares changing hands with a total traded value reaching KD300.85mn. High volume was seen on the Investment sector, accounting for 31.09 percent of the total traded volume this week with 560.20mn shares traded. Three of the investment companies made it to the highest volume list with Al-Deera Holding Company being the most traded among those with 62.98mn shares traded. However, on top of the list came National Ranges Company with 100mn shares traded accounting for 5.55 percent of the total traded volume in the market.
On the value list, the Services sector took the lead, with a total traded value of KD112.50mn, accounting for 37.40 percent of total market value. Zain, the largest listed company in the Kuwaiti bourse, topped the traded value list for the third week, with a total traded value of KD43.57mn. The heavyweight scrip closed flat at KD1.280. Agility, another large cap company in the sector, followed with KD17mn traded.
Agility's scrip closed 10.14 percent lower at the end of the week. Global Industrial index was the biggest gainer, adding 1.79 percent with several large capitalization industrial stocks ending the week with gains. However, percentage-wise, Gulf Rocks Company made it to the top gainers list with its share price rising by 18 percent. The company announced this week its intention to distribute 10 percent cash dividends and 10 percent bonus shares for its shareholders, despite recording loss for the year 2009, subject to the AGM approval.
The banking sector was a prominent mover of the market this week as Global Banking Index added 1.09 percent to its value. Five of the Kuwaiti banks closed higher with Gulf Bank being the biggest gainer in the sector, adding 7.94 percent to its share price. The scrip recorded its highest level since last October 2009. On the other hand, the food sector was the biggest loser for the week with Global Food Index closing down by 4.14 percent with its biggest component, Kuwait Foodstuff Company (Americana) losing 4.76 percent of its share value while Danah Al-Safat Foodstuff Company was the biggest loser in the sector, shedding 9.80 percent of its share value.
Global Services Index came second, shedding 0.98 percent of its value as most of its large capitalization stocks closed down for the week. In the same sector, Arabi Group Holding Company and Mubarrad Transport Company topped the biggest gainers list adding 31.75 percent and 24.14 percent, respectively to their share price and helped limiting the sectors' loss. On the losers list, Al-Madar Finance & Investment Company and Al-Themar International Holding Company topped the list, losing 15.63 percent each.
Global's special indices ended on mixed notes. Global Large Cap (Top 10) Index was down, shedding 0.18 percent of its value. Global Islamic Sharia Index was also down by 1.13 percent while Global Small Cap (Low 10) index closed marginally up by 0.04 percent.
Macroeconomic News
Kuwait's exports to the 27-member European Union in 2009 totaled 2.844bn euro and imports from the EU were valued at 3.708bn euro leaving a trade balance of 863mn euro in favor of EU, according to figures published by Eurostat, the EU's statistical bureau. EU-Kuwait trade flows in 2009 compared with the figures of 2008 noted a sharp decline.
Kuwaiti exports to the EU in 2008 totaled 5.222bn euro and imports from the EU totaled 4.603bn euro leaving a balance of 619mn euro in favor of Kuwait. Crude oil was the main export item from Kuwait to the EU and in lesser quantities food products and chemicals. Machinery, manufactured products, chemicals, food and beverages are the main exports of EU countries to Kuwait. In 2009, trade balance with a few EU countries, the Netherlands, the UK, and Spain was in favor of Kuwait.
Oil related news
Kuwait Petroleum Corporation (KPC) has offered 80,000 tons of the cracked 380-centistoke (cst) fuel oil for March loading, its first parcel for the month, after selling three lots, totaling 240,000 tons for February loading, traders said. Offers for the cargo, for March 12-13 lifting from Shuaiba, were expected by February 22, with validity through the same day. KPC last sold two 80,000-tons parcels of the same oil grade for February loading. The first lot for lifting on February 11-15 was awarded to Middle East trader Bakri at a premium of around $12-13 a ton to Middle East spot quotes, on a free-on-board (FOB) basis. The second parcel for February 16-20 loading was sold to Glencore at an undisclosed premium.
Asian fuel oil fundamentals have weakened since the beginning of the month, largely on expectations of heavier supplies from the West in March.
Kuwait Gulf Oil Company (KGOC) expects oil production from the Al-Khafji oilfield to reach 300,000 barrels per day (bpd) by the end of the first quarter, its managing director said. "The company is working on a big number of exploration and drilling operations in the divided zone to reach the set goals of the firm and its Saudi partner," Bader Al-Khashti was quoted saying. Kuwait's current oil production from the field is at 272,000 bpd, Khashti said. Khafji, which is in the Neutral Zone between Kuwait and Saudi Arabia, has oil production capacity of around 550,000 bpd. Both countries plan to boost capacity in the zone to 700,000-900,000 bpd by 2030. Current gas production from Khafji is between 60mn to 70mn cubic feet per day, equally divided between the two countries, he said.
The OPEC member aims to reach an oil production capacity of 4mn bpd in 2020 and sustain it until 2030, Oil Minister Sheikh Ahmad Al-Abdullah Al-Sabah said last year. Kuwait's state-run Petrochemical Industries Company's (PIC) planned petrochemical plant will cost about $5bn, a PIC official said. The figure he gave is $2bn higher than an estimate given last month in an Oil Ministry publication. The plant will produce over 1mn tons per year of ethylene and is expected to be operational by 2015, Yousef Al-Atiqi, PIC deputy managing director for olefins, said at a media event. He said the project would cost around $5bn.
The plant would be the firm's third olefins complex, Atiqi said. Shareholders are not yet finalized and the project is still at a "preliminary studies phase", he added. Last year, Atiqi said that PIC was planning to shut its fertilizers business and focus on its more profitable petrochemicals division. PIC's current capacity at olefins I and II is about 1.65mn tons per year of ethylene and its derivatives.
Other local news
Standard & Poor's (S&P) rating agency said this week that Banks in Kuwait and Dubai will endure a tougher 2010 than their Gulf peers as lenders in the region continue to take provisions against bad credit, which will weigh on their financial performance. On the Kuwaiti banks the rating agency said that they are suffering from a domestic real estate slump and analysts expect credit conditions to remain difficult in the next 18 months. Moody's also said that it has a negative outlook for the Kuwaiti banks, warning that the economy, despite large-scale government stimulus plans, remains undiversified and relies too heavily on its oil sector.
KGL Ports International Warehousing and Transport Company (KGLPI) announced the launch of its capital increase through the Private Placement Offering of 150mn new shares. Details of the capital increase will be revealed at a press conference to be held on March 2, 2010 at the KGL Holding Auditorium. In 2009, the total number Private Equity transactions in the MENA region has decreased significantly by almost 71% to 15 entry transactions compared to 51 for the same period last year. On the fundraising front, the year saw only two funds successfully raised. Despite the challenging environment that faced the MENA region in general, the MENA region will remain one of the fast growing.
This will reflect positively on the future outlook of the private equity sector. However, the fundraising is likely to continue to go on a slow pace in 2010 because private equity houses will focus more on deploying the dry powder available in the region. Deal flow will start to increase in 2010 supported by the opportunities available in the defensive sectors. We believe that the IPO market will improve. Nonetheless, it will not be the primary exit route for private equity houses. Private equity houses will be exiting their investments through trade sale which will expose the MENA private equity sector to more interesting exits structure.
Oil market
Oil prices witnessed a W-shaped trend as flow of both positive and negative news pulled oil prices in opposite directions. US crude increased by 5.3% during the review period (22 Jan 10-19 Feb 10) to settle at $79.81 per barrel mark. Debt crisis in Greece and concerns of contagion to other European economies dampened investor sentiments and raised questions over the effectiveness of the currency and economic union. The fears were allayed to a certain extent as the European countries pledged their support to Greece without giving much details on the kind of support.
Oil prices rallied in the last two weeks of the review period as US non-core inflation declined by 0.1% indicating that Fed is unlikely to face pressure to increase the interest rates in the short-term. In addition, larger than expected declines in US end-product stocks, strikes at French refineries and geo-political situation in the Middle-East provided support to oil prices. OPEC basket and Kuwait export crude price followed the same pattern increasing by 0.8% and 3.2% during the review period to settle at $75.17 and $76.09 per barrel respectively.
Kuwait Stock Exchange
Global Investment House played a major role in bringing the two parties together to the negotiating table in the deal between Zain Africa and Bharti Airtel. Bader Al-Sumait, CEO at Global said that the Kuwaiti market might witness more acquisitions similar to the Zain deal, as well as the acquisition of a bank. He expressed his full confidence that the deal between Zain Africa and Bharti Airtel will be concluded. Global's Investment Banking Division has successfully managed to become the Regional Advisor for Bharti Airtel and participate in this major deal which is considered one of the largest deals in the world amounting to $10.7bn, Al-Sumait stated.
Shareholders of the National Bank of Kuwait (NBK) will vote on a 10 percent capital raise on March 7, the bank announced as the general assembly meeting was set on that date. The bank had said the move was intended to support its strategic expansion plans. Shareholders will decide on a rights issue at a price of 500fils per share including premium. NBK will raise its capital by KD29.73mn ($102.9mn), to KD359.79mn, according to an ad released on that regards.
Kuwait Finance House (KFH) said it plans to increase its capital by eight percent to KD248.98mn ($861.5mn). The capital hike will take place through distributing bonus shares worth KD18.44mn to its shareholders, KFH said. KFH's shareholders will vote on the capital hike plan on March 8.
Highlights of the week
The good Kuwaiti-Syrian relations positively reflected on the economic ties and investments between the two countries, resulting in high figures and constant progress. Economic cooperation between Kuwait and Syria is based on a number of agreements that encouraged the protection of investments, the prevention of double taxation, and increasing trade exchange. Kuwait is one of the first countries to invest in Syria. It established Kuwait united investment company in Syria with a capital of $200mn and established a number of commercial banks like Gulf Bank and Cham Islamic Bank. Kuwait is currently ranked third, after Saudi Arabia and Turkey, in volume of foreign investments in Syria. In 2005, Syrian exports to Kuwait came to about $36mn and trade exchange between Syria and Kuwait reached $345mn. Between 2005 and 2006, Syrian exports to Kuwait made up 35 percent of the country's exports.
India's Bharti Airtel has lined up $9bn in loans from foreign and local banks for its planned acquisition of the African assets of Kuwait's Zain. The newspaper cited three people familiar with the matter as saying nearly a dozen banks - mostly foreign - had come forward to commit the amount in long-term loans, compared with earlier plans of taking short-term or bridge loans. Standard Chartered is leading the consortium of banks and has alone committed $5.5bn. The pricing for the 7-year loan could be close to 300 basis points over the London inter-bank offered rate. Barclays has also committed close to $5bn to the company, the source said. Foreign banks including ANZ, BNP Paribas, Citi, DBS, Bank of Tokyo Mitsubishi UFJ and JPMorgan were likely to be part of the overseas syndication. Among Indian banks, the State Bank of India and Kotak Mahindra Bank, besides some state owned banks, also want to partner in this deal.
© Kuwait Times 2010
