18 December 2011
KUWAIT: Despite the improved performance Kuwait Stock Exchange (KSE) witnessed at the beginning of the week, after the newly appointed Prime Minister, HH Sheikh Jaber Mubarak Al-Sabah, formed a new Cabinet, the bearish tone resurfaced and took the market to its lowest level since November 28. The drop came in line with international markets' retreat, as US stocks tumbled on concerns of Europe's debt woes returning to the forefront, after major credit ratings agencies warned that European leaders had not done enough to tackle the region's debt crisis.
However, all eyes in the local market are currently concentrated on the upcoming parliamentary elections, after HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah has dissolved the assembly following the government's resignation. Investors wish to see some political stability and spending directed towards the country's development plan in the coming period, prior to injecting new cash into the market. For the week, Kuwait Stock Exchange (KSE), as measured by the market weighted Global General Index, was mainly down, shedding 1.37 percent of its value and closing at 180.15 point, escalating the year-to-date index loss to 19.41 percent.
Seven out of the eight market sectors ending at lower levels.KSE price index was also down, losing 0.74 percent (43.70 points) during the week and closing at 5,823.3 points, presenting a 16.28 percent decline on a year-to-date basis. Market capitalization shrunk by KD407.27mn during the week, reaching KD29.47bn. In the meantime, market breadth was strongly tilted towards decliners' side with 77 stocks declining against only 30 stocks that have increased out of 128 traded shares.
Total trading activity was lower as the year came toward ending. Total weekly volume was down by 11.89 percent, reaching 904.56mn shares changing hands at a total traded value of KD116.52mn (3.63 percent lower compared the earlier week). Real Estate sector accounted for 31.76 percent (287.26mn shares) of the total market traded shares as heavy trading was seen on Abyaar Real Estate Development Company during the week.
The scrip topped the volume list for the week with 124.72mn shares changing hands. The scrip also appeared in the top gainers list, adding 11.32 percent to its value, and closing at KD0.0295. The increase came in line with the company announcing the sale of one of its properties in Dubai for a total value of AED10mn, which will be used to settle its debt obligations.
On the other hand, Banking sector was the most traded in terms of value, accounting for 36.63 percent of the aggregate traded value (KD42.68mn worth of shares traded). Gulf Bank was the biggest value traded stock in the market for the third week, with KD33.58mn worth of stocks traded. However, the scrip ended the week flat at KD0.510.
On sector performance, the drop was broad-based with seven out of the eight market sectors ending the week retreating. Heavyweights Global Banking and Services sectors closed down by 1.39 percent and 1.26 percent, respectively. Commercial Bank of Kuwait was the only gaining stock in the banking sector, adding 2.53 percent to its value, and closing at KD0.810. In the services sector, heavyweight Zain and Agility closed down by 1.10 percent and 2.53 percent, respectively, while Wataniya Telecom ended the week flat at KD1.960.
Global Industrial Index was the biggest loser for the second week, shedding 1.53 percent of its value. Heavyweight, National Industries Group (Holding) was a major loser in the sector, down by 7.41 percent. Meanwhile, in the same sector, Contracting and Marine Services Company topped the gainers' list for the week, adding 28.75 percent to its share value. On the other hand, Global Insurance Sector Index was the only gainer during the week, adding 1.19 percent to its value. Kuwait Insurance Company was the sole advancer in the sector, adding 8.33 percent to its share value and closing at KD0.325.
Global Large Cap (Top 10) index was notably down by 1.24 percent with one of its ten stocks, Commercial Bank of Kuwait, closing at higher level as mentioned above. Islamic companies were also seen down by 0.86 percent, as measured by Global Islamic Sharia Index. Majority of the Islamic companies ended either down or flat, while the biggest Islamic stock, Kuwait Finance House closed lower by 1.11 percent. On the other hand, Islamic Abyaar Real Estate Development Company was the biggest gainer, adding 11.32 percent to its share price.
Macroeconomic News
The Central Bank of Kuwait (CBK) is not considering the option of decreasing the value of Kuwaiti Dinar to increase the country's revenues "as such a measure will erode trust in the currency," Director of Economic Research Department at CBK Sami Al-Anba'e said. Earlier, acting Finance Minister Mustafa Al-Shamali had warned that the measure, which is very risky, might have to be taken due to the huge increase in the State's general budget.
Speaking at a seminar "Reducing the value of Kuwaiti Dinar," organized recently by Kuwait Accountants and Auditors, Al-Anba'e said the step is not good for the country as it will lead to a steep hike in the cost of commodities Kuwait totally depends on. Therefore, the country's economy will be harmed. Al-Anba'e stressed the necessity of curbing expenditure and consumption by imposing taxes over luxurious and unnecessary commodities. He added that Kuwaiti Dinar is a reliable currency due to the independence of CBK, the main decision-maker in such issues.
He mentioned that the value of Kuwaiti dinar was not much affected since it was pegged with the basket of currencies in 2007. OPEC's Wednesday output deal did not include any commitment from Gulf Arab producers who had raised output to compensate for lost Libyan oil to cut back as its output revives, UAE Oil Minister Mohammed bin Dhaen Al-Hamli said. An OPEC delegate from a Gulf producer also said the agreement to fix an overall group output quota of 30mn barrels per day did not include any discussion on individual member quotas.
Price of Kuwaiti crude was down by $2.85 during the last week, reaching $107.00 per barrels (pb) on Wednesday, December 14 compared to $109.85 recorded on Wednesday, December 07, as announced by Kuwait Petroleum Corporation (KPC). However, a marginal rise of the oil price came towards the end of the week after the International Energy Agency (IEA) forecast global demand for crude would grow to 1.3mn barrels despite global economic slowdown. Prices of the crude have been fluctuating upward and downward due to a mixture of factors, namely the European debts crisis.
OPEC oil producers sealed their first new output agreement in three years in a deal that settles a 6-month-old argument over supply policy firmly in Saudi Arabia's favor. OPEC agreed a target of 30mn barrels daily, ratifying current production near 3-year highs. The deal vindicates Saudi Arabia after its proposal to raise output in June to stem rising prices was rejected by prince hawks led by Iran, Algeria and Venezuela. In this regard, Kuwait's oil minister said on Wednesday, December 14, he hoped OPEC w
ould reach agreement on a new 30mn barrel a day production limit. "Now we are going for 30mn which I think most countries agreed to. I am hopeful we will agree on this ceiling today at this meeting," said Kuwaiti Oil Minister Mohammad Al-Busairi.
Kuwait ups OSP
Kuwait has raised the official selling price (OSP) for its crude oil sales to Asian buyers for January by $1.55 a barrel to $2.40 a barrel above the average of Oman/Dubai quotes, traders said on Friday, December 9. That is within the range of expectations in a Reuters survey. Kuwait set its OSP at $0.85 per barrel above the Oman/Dubai average for December loading. Kuwait's crude price formula is loosely linked to that of Saudi Arabia's Arab Medium grade. A Kuwait Oil Company (KOC) source revealed that the company has frozen the negotiations it had been working on with Exxon mobile to develop heavy oil wells North of Kuwait.
Sources said that a halt to the negotiations came after an objection was made by an official leader in the state about the contracting draft with Shell to develop gas fields and the accusation of the company of making violations in the contracting mechanism. Sources explained that KOC had come a long way in its negotiations with Exxon mobile, but that the formation of enquiry committees in the Shell contract stopped the negotiations as the highlighted the point that the Company's experience in heavy oil is very limited and that it had always depended on light oil.
Kuwait named a new government on December 13, changing the heads of only minor ministries, despite a deep political impasse in the OPEC nation that has led to delays and cancellations of key reforms and projects. Sheikh Jaber Al-Mubarak Al-Sabah, named as prime minister by HH the Amir last month, kept his job as defense minister as well as taking over the ministry of the interior, Kuwait media said.
Oil minister Mohammad Al-Busairi and Finance Minister Mustapha Al-Shamali also held on to their posts, as did Minister for Foreign Affairs Sheikh Sabah Khaled Al-Sabah and Trade Minister Amani Bouresli. The cabinet will oversee elections of a new parliament after HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah dissolved the assembly following the government's resignation.
STC Group announced that it will begin procedures to list the shares of Kuwait Telecom Company (VIVA), an STC Group Company in the Kuwaiti Stock Exchange. This listing is an execution of the Amiri Decree number 187/2007 following the rules and regulations of the Kuwaiti Stock Exchange (KSE) allowing customers to trade their stocks in KSE. STC Group CEO, Engineer Saud bin Majed Al Daweesh highlighted that the agreement was concluding at VIVA headquarter with NBK Capital to manage the listing.
KSE stress tests
Kuwait Stock Exchange (KSE) conducted its first review of the Kuwait-15 index introduced in mid 2011, and said there would be regular reviews late May and late November each year. The review pushed Boubyan Petrochemical Company out and onto the reserve list, and replaced it by Commercial Bank of Kuwait. Imtiaz company was meanwhile crossed out, and is now off the reserve list. The KSE statement pointed out that the Kuwait-15 companies represent 68.02 percent of overall market value, and 51.43 percent of th
e overall liquidity.
A report, issued by the Diplomatic Center for Strategic Studies ranked Kuwait fourth largest Arabic petrochemicals producer, with 6.8 percent of the total Arab production. Jassim Transport & Stevedoring Company W.L.L. (JTC) has further consolidated its position as one of Kuwait's leading logistics companies with the recent award of the tender from the Public Authority for Industry (PAI), according to a press release this week. The scope of the contract comprises cargo handling and transportation between Kuwait sea and land transit gates and Kuwait Free Trade Zone in Shuwaikh Port for a period of three years.
The project for the establishment of the Free Trade Zone is a key element in the government's vision to transfer Kuwait into a Global Financial and Trade Hub. By granting exemptions from taxes and customs duties, issuing licenses on the spot and having as little state intervention as possible, the Kuwait Free Trade Zone promises to give competition to the neighboring free zones in Dubai and Iran, in the near future. The operation of the free zone is managed by PAI and is supervised by the Ministry of Comme
rce and Industry (MCI).
Highlights of the week
Assistant Undersecretary for Legal Affairs at the Ministry of Communications Abdul-Mohsen Al-Mutairi said that Kuwait is one of the most important centers in the area of international trade and logistics in the Middle East. Al-Mutairi said in a speech at the opening of the first Kuwait Conference and Exhibition of supply networks and logistics operations on behalf of the Minister of Electricity and Water and Minster of Communications Salem Al-Uthaina that logistics operations play a pivotal role as whole n
ations may be affected as a result of the non-arrival of supplies through their territories of territories adjacent to them.
He added that the construction of new ports in Kuwait or those under construction is a successful indication for the future of the country, pointing to the significance of building integrated rail networks in the Arab countries. He also stressed the importance of stiffening controls on goods traded in the border areas between the Arab countries to keep pace with global requirements and in line with the global free market mechanisms.
Industrial and Financial Investments Company announced that it is undergoing negotiations with an investor to sell its stake in Kuwait Qatar Insurance Company. Advanced Technology Company announced that it has signed a one-year, KD4.25mn contract with the heirs of Sheikh Mubarak Abdullah Al-Sabah to establish, supply and install medical equipment at Sheikh Al-Abdullah Al-Jaber Al-Sabah Dialysis Center.
Osoul Investment Company announced selling shares owned by Gulf Capital Group in an auction for KD166,685 to pay part of the Group's debts to OSOUL. In addition to the above, Osoul seized KD71,875 mortgaged at Kuwait Clearing Company. Consequently, the total reached KD238,560 based on the ruling which forces Gulf Capital Group to pay KD2.31mn to OSOUL. In case of collecting the money prior to December 31, 2011, it will appear in the results of the 4th quarter 2011.
KUWAIT: Despite the improved performance Kuwait Stock Exchange (KSE) witnessed at the beginning of the week, after the newly appointed Prime Minister, HH Sheikh Jaber Mubarak Al-Sabah, formed a new Cabinet, the bearish tone resurfaced and took the market to its lowest level since November 28. The drop came in line with international markets' retreat, as US stocks tumbled on concerns of Europe's debt woes returning to the forefront, after major credit ratings agencies warned that European leaders had not done enough to tackle the region's debt crisis.
However, all eyes in the local market are currently concentrated on the upcoming parliamentary elections, after HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah has dissolved the assembly following the government's resignation. Investors wish to see some political stability and spending directed towards the country's development plan in the coming period, prior to injecting new cash into the market. For the week, Kuwait Stock Exchange (KSE), as measured by the market weighted Global General Index, was mainly down, shedding 1.37 percent of its value and closing at 180.15 point, escalating the year-to-date index loss to 19.41 percent.
Seven out of the eight market sectors ending at lower levels.KSE price index was also down, losing 0.74 percent (43.70 points) during the week and closing at 5,823.3 points, presenting a 16.28 percent decline on a year-to-date basis. Market capitalization shrunk by KD407.27mn during the week, reaching KD29.47bn. In the meantime, market breadth was strongly tilted towards decliners' side with 77 stocks declining against only 30 stocks that have increased out of 128 traded shares.
Total trading activity was lower as the year came toward ending. Total weekly volume was down by 11.89 percent, reaching 904.56mn shares changing hands at a total traded value of KD116.52mn (3.63 percent lower compared the earlier week). Real Estate sector accounted for 31.76 percent (287.26mn shares) of the total market traded shares as heavy trading was seen on Abyaar Real Estate Development Company during the week.
The scrip topped the volume list for the week with 124.72mn shares changing hands. The scrip also appeared in the top gainers list, adding 11.32 percent to its value, and closing at KD0.0295. The increase came in line with the company announcing the sale of one of its properties in Dubai for a total value of AED10mn, which will be used to settle its debt obligations.
On the other hand, Banking sector was the most traded in terms of value, accounting for 36.63 percent of the aggregate traded value (KD42.68mn worth of shares traded). Gulf Bank was the biggest value traded stock in the market for the third week, with KD33.58mn worth of stocks traded. However, the scrip ended the week flat at KD0.510.
On sector performance, the drop was broad-based with seven out of the eight market sectors ending the week retreating. Heavyweights Global Banking and Services sectors closed down by 1.39 percent and 1.26 percent, respectively. Commercial Bank of Kuwait was the only gaining stock in the banking sector, adding 2.53 percent to its value, and closing at KD0.810. In the services sector, heavyweight Zain and Agility closed down by 1.10 percent and 2.53 percent, respectively, while Wataniya Telecom ended the week flat at KD1.960.
Global Industrial Index was the biggest loser for the second week, shedding 1.53 percent of its value. Heavyweight, National Industries Group (Holding) was a major loser in the sector, down by 7.41 percent. Meanwhile, in the same sector, Contracting and Marine Services Company topped the gainers' list for the week, adding 28.75 percent to its share value. On the other hand, Global Insurance Sector Index was the only gainer during the week, adding 1.19 percent to its value. Kuwait Insurance Company was the sole advancer in the sector, adding 8.33 percent to its share value and closing at KD0.325.
Global Large Cap (Top 10) index was notably down by 1.24 percent with one of its ten stocks, Commercial Bank of Kuwait, closing at higher level as mentioned above. Islamic companies were also seen down by 0.86 percent, as measured by Global Islamic Sharia Index. Majority of the Islamic companies ended either down or flat, while the biggest Islamic stock, Kuwait Finance House closed lower by 1.11 percent. On the other hand, Islamic Abyaar Real Estate Development Company was the biggest gainer, adding 11.32 percent to its share price.
Macroeconomic News
The Central Bank of Kuwait (CBK) is not considering the option of decreasing the value of Kuwaiti Dinar to increase the country's revenues "as such a measure will erode trust in the currency," Director of Economic Research Department at CBK Sami Al-Anba'e said. Earlier, acting Finance Minister Mustafa Al-Shamali had warned that the measure, which is very risky, might have to be taken due to the huge increase in the State's general budget.
Speaking at a seminar "Reducing the value of Kuwaiti Dinar," organized recently by Kuwait Accountants and Auditors, Al-Anba'e said the step is not good for the country as it will lead to a steep hike in the cost of commodities Kuwait totally depends on. Therefore, the country's economy will be harmed. Al-Anba'e stressed the necessity of curbing expenditure and consumption by imposing taxes over luxurious and unnecessary commodities. He added that Kuwaiti Dinar is a reliable currency due to the independence of CBK, the main decision-maker in such issues.
He mentioned that the value of Kuwaiti dinar was not much affected since it was pegged with the basket of currencies in 2007. OPEC's Wednesday output deal did not include any commitment from Gulf Arab producers who had raised output to compensate for lost Libyan oil to cut back as its output revives, UAE Oil Minister Mohammed bin Dhaen Al-Hamli said. An OPEC delegate from a Gulf producer also said the agreement to fix an overall group output quota of 30mn barrels per day did not include any discussion on individual member quotas.
Price of Kuwaiti crude was down by $2.85 during the last week, reaching $107.00 per barrels (pb) on Wednesday, December 14 compared to $109.85 recorded on Wednesday, December 07, as announced by Kuwait Petroleum Corporation (KPC). However, a marginal rise of the oil price came towards the end of the week after the International Energy Agency (IEA) forecast global demand for crude would grow to 1.3mn barrels despite global economic slowdown. Prices of the crude have been fluctuating upward and downward due to a mixture of factors, namely the European debts crisis.
OPEC oil producers sealed their first new output agreement in three years in a deal that settles a 6-month-old argument over supply policy firmly in Saudi Arabia's favor. OPEC agreed a target of 30mn barrels daily, ratifying current production near 3-year highs. The deal vindicates Saudi Arabia after its proposal to raise output in June to stem rising prices was rejected by prince hawks led by Iran, Algeria and Venezuela. In this regard, Kuwait's oil minister said on Wednesday, December 14, he hoped OPEC w
ould reach agreement on a new 30mn barrel a day production limit. "Now we are going for 30mn which I think most countries agreed to. I am hopeful we will agree on this ceiling today at this meeting," said Kuwaiti Oil Minister Mohammad Al-Busairi.
Kuwait ups OSP
Kuwait has raised the official selling price (OSP) for its crude oil sales to Asian buyers for January by $1.55 a barrel to $2.40 a barrel above the average of Oman/Dubai quotes, traders said on Friday, December 9. That is within the range of expectations in a Reuters survey. Kuwait set its OSP at $0.85 per barrel above the Oman/Dubai average for December loading. Kuwait's crude price formula is loosely linked to that of Saudi Arabia's Arab Medium grade. A Kuwait Oil Company (KOC) source revealed that the company has frozen the negotiations it had been working on with Exxon mobile to develop heavy oil wells North of Kuwait.
Sources said that a halt to the negotiations came after an objection was made by an official leader in the state about the contracting draft with Shell to develop gas fields and the accusation of the company of making violations in the contracting mechanism. Sources explained that KOC had come a long way in its negotiations with Exxon mobile, but that the formation of enquiry committees in the Shell contract stopped the negotiations as the highlighted the point that the Company's experience in heavy oil is very limited and that it had always depended on light oil.
Kuwait named a new government on December 13, changing the heads of only minor ministries, despite a deep political impasse in the OPEC nation that has led to delays and cancellations of key reforms and projects. Sheikh Jaber Al-Mubarak Al-Sabah, named as prime minister by HH the Amir last month, kept his job as defense minister as well as taking over the ministry of the interior, Kuwait media said.
Oil minister Mohammad Al-Busairi and Finance Minister Mustapha Al-Shamali also held on to their posts, as did Minister for Foreign Affairs Sheikh Sabah Khaled Al-Sabah and Trade Minister Amani Bouresli. The cabinet will oversee elections of a new parliament after HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah dissolved the assembly following the government's resignation.
STC Group announced that it will begin procedures to list the shares of Kuwait Telecom Company (VIVA), an STC Group Company in the Kuwaiti Stock Exchange. This listing is an execution of the Amiri Decree number 187/2007 following the rules and regulations of the Kuwaiti Stock Exchange (KSE) allowing customers to trade their stocks in KSE. STC Group CEO, Engineer Saud bin Majed Al Daweesh highlighted that the agreement was concluding at VIVA headquarter with NBK Capital to manage the listing.
KSE stress tests
Kuwait Stock Exchange (KSE) conducted its first review of the Kuwait-15 index introduced in mid 2011, and said there would be regular reviews late May and late November each year. The review pushed Boubyan Petrochemical Company out and onto the reserve list, and replaced it by Commercial Bank of Kuwait. Imtiaz company was meanwhile crossed out, and is now off the reserve list. The KSE statement pointed out that the Kuwait-15 companies represent 68.02 percent of overall market value, and 51.43 percent of th
e overall liquidity.
A report, issued by the Diplomatic Center for Strategic Studies ranked Kuwait fourth largest Arabic petrochemicals producer, with 6.8 percent of the total Arab production. Jassim Transport & Stevedoring Company W.L.L. (JTC) has further consolidated its position as one of Kuwait's leading logistics companies with the recent award of the tender from the Public Authority for Industry (PAI), according to a press release this week. The scope of the contract comprises cargo handling and transportation between Kuwait sea and land transit gates and Kuwait Free Trade Zone in Shuwaikh Port for a period of three years.
The project for the establishment of the Free Trade Zone is a key element in the government's vision to transfer Kuwait into a Global Financial and Trade Hub. By granting exemptions from taxes and customs duties, issuing licenses on the spot and having as little state intervention as possible, the Kuwait Free Trade Zone promises to give competition to the neighboring free zones in Dubai and Iran, in the near future. The operation of the free zone is managed by PAI and is supervised by the Ministry of Comme
rce and Industry (MCI).
Highlights of the week
Assistant Undersecretary for Legal Affairs at the Ministry of Communications Abdul-Mohsen Al-Mutairi said that Kuwait is one of the most important centers in the area of international trade and logistics in the Middle East. Al-Mutairi said in a speech at the opening of the first Kuwait Conference and Exhibition of supply networks and logistics operations on behalf of the Minister of Electricity and Water and Minster of Communications Salem Al-Uthaina that logistics operations play a pivotal role as whole n
ations may be affected as a result of the non-arrival of supplies through their territories of territories adjacent to them.
He added that the construction of new ports in Kuwait or those under construction is a successful indication for the future of the country, pointing to the significance of building integrated rail networks in the Arab countries. He also stressed the importance of stiffening controls on goods traded in the border areas between the Arab countries to keep pace with global requirements and in line with the global free market mechanisms.
Industrial and Financial Investments Company announced that it is undergoing negotiations with an investor to sell its stake in Kuwait Qatar Insurance Company. Advanced Technology Company announced that it has signed a one-year, KD4.25mn contract with the heirs of Sheikh Mubarak Abdullah Al-Sabah to establish, supply and install medical equipment at Sheikh Al-Abdullah Al-Jaber Al-Sabah Dialysis Center.
Osoul Investment Company announced selling shares owned by Gulf Capital Group in an auction for KD166,685 to pay part of the Group's debts to OSOUL. In addition to the above, Osoul seized KD71,875 mortgaged at Kuwait Clearing Company. Consequently, the total reached KD238,560 based on the ruling which forces Gulf Capital Group to pay KD2.31mn to OSOUL. In case of collecting the money prior to December 31, 2011, it will appear in the results of the 4th quarter 2011.
© Kuwait Times 2011
