KUWAIT CITY: Kuwait stocks pulled sharply lower on Monday, as concerns mounted over the possible decline in the fourth quarterly earnings of some of the listed companies, especially in the investment sector. The market tumbled 128.2 points, extending its losses to the third straight session, led by Kuwait Finance House and Wataniya Telecom. KFH sank almost 9 percent while the mobile telecommunication service provider slid 9.4 percent even as other blue chips ended in red. The market sentiment remains weak and investors are wary of taking up fresh positions.
The banking stocks posted moderate to heavy losses. National Bank of Kuwait dipped 60 fils and Commercial Bank edged 20 fils lower. Al Ahli Bank shed 50 fils. Kuwait International Bank bucked the trend to climb 10 fils whereas Burgan Bank was down 25 fils. The lender had fallen 12.5 percent in the previous month and is down 34 percent since the start of the year. KIPCO dropped 25 fils while Global Investment House took in 6 fils, snapping the losing spree. National Industries Group slipped 25 fils while Agility and Zain shed 50 fils each. KSE index sagged 1.8 percent to wind up at 6,851.5 points amid a drop in volume turnover.
Benchmark
The ongoing financial crisis coupled with weak regional too has cast its shadow over the market sentiments. The index had slid below the 7,000 benchmark on Sunday as efforts by the government and Central Bank failed to enthuse investors. It had fallen below the 8,000 point mark on Dec 30 after having slid past the 9,000 benchmark on Nov 12, 2008. The bourse in down almost 10 percent since the start of the year after having plunged 36.4 percent during 2008. The sectoral indices all swung lower during the session. Banking sector dipped 4.6 percent led by Kuwait Finance House and National Bank of Kuwait while KIPCO and Aref Investment Co dragged investment sector by 1.8 percent. The two sectors makes for the bulk of the shares traded during the session.
Real estate was down 1.5 percent as Mabanee Co posted moderate losses and most of the shares in the sector closed lower. Insurance sector eased 1.3 percent and National Industries Group and Gulf Cables pulled industrials down by 1.5 percent. Services sector was off 1.8 percent led by Zain and Wataniya Telecom while food Kuwait Food Co (Americana) weighed on industrial sector, which closed 1.4 percent lower. Non-Kuwaitis fell 1.3 percent led by marginal losses in number of its shares. In the bourse related news, Aayan Leasing and Investment Company is close to an agreement with the Commercial Bank of Kuwait to secure a KD 140 million loan to tide over the problems due to the global financial crisis. The company will offer guarantee in the form of assets worth KD 360 million to cover the loan. National Bank of Kuwait has won the approval of Ministry of Commerce and Industry to begin the marketing of Islamic Insolvent Equity Fund inside Kuwait. The fund was established in the Cayman Islands and has a fixed capital of $200 million.
National Investment Company is seeking a loan worth KD 30 million, a big portion of which will be used for investing in the local bourse. The rest will be used to boost the performance of the company. The company has assets worth KD 200 million whereas its commitment amounts to KD 60 million. Central Bank of Kuwait has approved Al Safat Investment Co's request to buy a maximum of 10 percent of its shares issued for 6 months, subject to adherence to the terms and conditions. The bank has also granted permission to International Finance Co to purchase up to a minimum of 10 percent of its issued shares for 6 months under the specified terms and conditions.
Dropped
The volume of shares dropped 16 percent as investors toed caution and refrained from taking fresh positions. The market had dipped to around 54 million on 4th of the month and been trading alarmingly thin since past few weeks owing to bleak outlook. Banking sector dipped 31 percent and investment sector lost more than half its previous level. Insurance sector lost almost 100 percent in volume during the session whereas real estate rose 13.5 percent on back of Al Themar International Holding Co.
Industrials climbed 17 percent in volume led by Boubyan Petrochemical Co and services sector surged 29 percent helped by heavy trading in Kuwait Gulf Links. Food sector slid 50 percent and non-Kuwaiti sector dropped 32 percent.
Bank of Bahrain and Kuwait has launched investment banking arm under the name of "KABINOVA" to work investment compliant with shariah law. Central Bank of Bahrain has granted license to the new bank with authorized capital of $500 million of which $125 million is paid up. Ministry of Commerce has given its approval to Commercial Bank of Kuwait to market three new investment funds with variable capitals.
Kuwait First Investment and Gulf Investment House have reached an initial merger or acquisition as the investment sector is seeking ways to weather the global financial turmoil. Kuwait Finance House, a major stakeholder in Gulf Investment and National Investment Co -- a main investor in First Investment have not given the details of the deal. Most of the investment companies have been hit by the credit crunch as the value of their shares have tumbled sharply in the past three months. Global Investment House, the largest investment banker in Kuwait, earlier in the month has said that it had defaulted in most of its debts and Investment Dar too had sought loans worth $1 billion to tide over its difficulties. The market opened on a weak note and slid gradually in early trading as weak sentiments dragged the frontline stocks lower. The index continued to decline as trading floor was dominated by sell-offs in select counters. KSE index hit the day's low of 6,823.4 points and a spurt in buying at close helped pare the losses slightly.
Mechanism
Kuwait government is readying to seek parliamentary approval of the long awaited bill to set up a financial regulatory mechanism, which stipulates tough punishment for inside trading in stock exchange. The bourse, which had declined over 36 percent during 2008, had been facing a string of alleged irregularities. The bill was originally planned to be tabled in the Parliament in 2007, but was abandoned following a political stand off between the executive and legislative branches which led to the eventual dissolution of Parliament and fresh elections. The market spread was skewed towards the losers. 11 counters advanced while 77 closed lower. Of the 91 counters active on Monday, 3 closed unchanged. 1,654 deals worth KD 21 million were transacted -- down 8.6 percent in value over previous session. KSE, with over 200 listed companies, is the second largest bourse in the region.
Top percentage gainer Gulf Glass Manufacturing Co jumped 6.7 percent to KD 0.395 and Global Investment House was up 6.25 percent to stand next. Burgan Group dipped 22 percent, the steepest decliner of the day, while Kuwait Gulf Links topped the volume with over 11 million shares changing hands. National Bank of Kuwait shed 60 fils to end at KD 0.960 after trading over 3.3 million shares while Commercial Bank edged 20 fils lower to KD 1.060. Al Ahli Bank sagged 50 fils and Burgan Bank was down 25 fils at KD 0.460. Kuwait Finance House plunged 100 fils, the maximum permitted single day loss, while Kuwait International Bank gained 10 fils to wind up at KD 0.194.
By John Mathews
© Arab Times 2009
