Kuwait: Kuwait Financial Centre “Markaz” recently released its Monthly Market Review report for the month of March 2023. Kuwait’s All Share Index witnessed a decline in March, posting a monthly loss of 2.7%. Among Boursa Kuwait’s sectoral indices, Insurance sector gained the most at 17.4%, while the Consumer Staples sector lost 7.0% for the month. Among Premier Market stocks, Kuwait Projects Holding and HumanSoft Holding Co. gained the most for the month, rising by 8.8% and 5.7% respectively. Kuwait Projects Holding Company’s gains were supported by strong Q4 2022 earnings results. The company announced a net profit of KD 25.2 million for 2022, registering a 44% increase from the previous year. Boubyan Bank and Boursa Kuwait Securities Company fell the most for the month at 15.9% and 11.1% respectively.
Kuwait consumer price inflation (CPI) rose by 3.22% y-o-y and 0.16% m-o-m in February primarily driven by Food & Beverage prices. The Central Bank of Kuwait did not raise their discount rate during the month despite the U.S. Fed hiking the Fed rates by 25 bps. In February, Kuwait’s credit growth remained flat, reducing the year-on-year credit growth from 7.7% in January to 6.6% in February. Household credit dropped for the first time since May 2020 while business credit increased 4.3% y/y during the month.
Regionally, GCC Markets were mixed, with S&P GCC composite index up 0.9% for the month. All equity indices, except Saudi Arabia and Oman ended negative for the month. Abu Dhabi and Qatar equity indices decreased the most, losing 4.2% and 3.4% respectively over the month, driven by the steep decline in banking stocks. Saudi markets rose by 4.8% for the month supported by the gains posted by few blue-chip companies. Saudi Telecom and Al-Rajhi Bank rose 13.9% and 4.6% respectively for the month.
The Central banks of UAE, Saudi Arabia, Bahrain, Oman, and Qatar raised interest rates by 25 bps mirroring the policy rate moves of the U.S Fed. S&P Global has stated that the GCC banks are anticipated to remain stable amidst the collapse of SVB due to strong liquidity positions on the back of limited lending activity in the U.S. and investment in high-credit quality instruments or with the U.S. Fed. According to the UAE Ministry of Finance, the country’s real GDP grew at 7.6% in 2022 on the back of favorable oil activity. The S&P Global UAE Purchasing Managers' Index (PMI) increased slightly to 54.3 in February after hitting a 12-month low of 54.1 in January indicating a slow rebound in the manufacturing sector. Moody's confirmed the Abu Dhabi government's long-term local and foreign currency issuer ratings at Aa2 and maintained the stable outlook citing strong balance sheet and net creditor position for the foreseeable future. Moody's increased Saudi Arabia's economic growth forecasts to 2.5% in 2023 and 3.1% in 2024, on expectations that the non-oil private sector activity will remain strong. Saudi Arabia's inflation slowed down to 3% y/y in February from 3.4% y/y in January, as food and transportation prices fell. S&P Global raised its sovereign rating on Saudi Arabia to "A/A-1", citing expected reform and diversification plans to boost development of the kingdom's non-oil sector and shift dependence away from oil.
Developed markets’ performance was positive in March with MSCI World index gaining 2.8% and S&P 500 index gaining 3.5%. Global markets were weighed by the stress in the banking sector due to the liquidity crisis among certain banks. The U.S Fed increased its policy rate by 25 bps in March. The S&P 500 index posted mild gains despite the interest rate hike, as the policymaker’s dovish comments towards further rate hikes sparked positive sentiment among the investors. In the UK, CPI rose by 10.4% y-o-y in February, more than consensus expectation. In response, the Bank of England (BoE) raised interest rates by 25 bps to 4.25%. The European Central Bank (ECB) raised its interest rate by 50 bps to 3.0% to moderate the soaring inflation despite concerns over strains in the financial system. In the eurozone, inflation fell to 8.5% in February from 8.6% in January, owing primarily to lower energy prices. The S&P Eurozone composite PMI increased from 52 in February to 54.1 in March indicating a pickup in economic activity. MSCI EM index gained 2.7% during the month.
Oil prices marked a decline of 4.9% closing at USD 79.8/bbl. for March 2023, owing to banking sector troubles raising concerns over future demand and Russia selling oil to India and China at record levels at a discounted price. Barclays cut its 2023 oil price forecast by USD 6/barrel to USD 92/barrel due to resilient output from Russia. On the other hand, OPEC+ affirmed that the price fluctuations were caused by fears in the banking industry and prices would normalize soon, as volatility was not caused by changes in the balance between demand and supply of oil. Gold prices gained 7.7% in March to 1,956.6 $/oz due to weakness in the U.S Dollar. Gold remained the best performing asset class in 2023.
Moving into April 2023, Global markets are expected to keenly observe any indications from Global Central Banks regarding further rate hikes. Although the next U.S. Fed meeting is expected to take place in May 2023, any indications from the U.S. Fed Chair is likely to cause turbulence in the markets as the effects of the steep rate hikes on the banking sector are already beginning to appear. Oil prices, which have been under pressure lately, are also likely to be sensitive to these changes.
About Kuwait Financial Centre “Markaz”
Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over KWD 1.154 billion as of 31 December 2022 (USD 3.77 billion). Over the years, Markaz has pioneered innovation by developing new concepts resulting in new investment channels. These channels enjoy unique characteristics and helped Markaz widen investors’ horizons. Examples include Mumtaz (the first domestic mutual fund), MREF (the first real estate investment fund in Kuwait), and Forsa Financial Fund (the first and only options market maker in the GCC since 2005), all conceptualized, established and managed by Markaz. Markaz was listed on the Boursa Kuwait in 1997.
For further information, please contact:
Sondos S. Saad
Media & Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"