|03 March, 2020

Markaz: Kuwait Markets pulled down by Coronavirus hurdle despite strong corporate earnings

S&P GCC composite index declined by 7.4% in February

Kuwait:Kuwait Financial CentreMarkaz” recently released its Monthly Markets Review report for the month of February 2020. Markaz report stated that Kuwait and other GCC markets were affected by jittery investor sentiments surrounding the spread of Novel Coronavirus despite posting strong corporate earnings for the full year 2019.

Kuwait All Share index registered a loss, decreasing by 4.0% in February. Among Kuwait’s Blue Chip companies, Kuwait Finance House (KFH), Zain and Boubyan Bank came out with strong results during the month for the full year 2019. All three companies witnessed double-digit growth in their yearly net profits for the second consecutive year, growing by 10.6%, 10.4% and 11.7% respectively in 2019. Despite the positive earnings momentum, widespread global investor panic has affected market sentiment, due to which Kuwait markets witnessed a fall. Kuwait’s oil and gas sector was the best performer in February, with the sector index rising by 1.1% while the Technology sector was the top loser, falling by 9.5%. Of the 13 sectors, 10 sectors have registered losses.

Regionally, the S&P GCC composite index declined by 7.4% for the month, with all markets except Bahrain and Oman posting losses. Qatar registered highest loss, declining by 9.1%. With a supply glut in liquefied natural gas pushing prices down, Qatar has delayed partnerships for its natural gas expansion plans. Saudi Arabia ended the month in negative territory, losing 7.5%. There is wide consensus on decrease in oil demand and multiple agencies have revised down their oil demand forecasts. Oman was the top performer in February, gaining 1.3%, followed by Bahrain, which gained 0.2%. S&P has cautioned that if coronavirus outbreak is not contained in the first quarter, GCC economies would be particularly affected as China contributes about 4% to 45% of the countries’ exports.

Markaz report also stated that among the GCC Blue Chip companies, DP World was the top gainer for the month with its stock price rising by 16.1%. The company has announced its delisting from Nasdaq Dubai with each share to be bought back at USD 16.75 per share.

The performance of Global equity markets was negative with the MSCI World Index losing 8.6% for the month. U.S. equities (S&P 500) fell by 8.4% in February. While U.S corporate earnings were better than the expectations, concerns over spread of coronavirus have pushed the markets down. Terming the virus as a health emergency, IMF has cut global economic growth to 3.2% from the earlier 3.3%. The UK market (FTSE 100 index) closed 9.7% lower during February. Britain’s economy showed no growth in Q4 2019 compared to Q3. It recorded an annual growth rate of 1.4% for 2019. Emerging markets ended the month in negative, with the MSCI EM posting monthly loss of 5.3%.

Oil prices closed at USD 50.5 per barrel at the end of February 2020, which is 13.1% lower than January 2020. As coronavirus spreads further, and the number of infected cases and deaths continue to increase, its effect on global economy is becoming more worrisome. This has put a downward pressure on oil prices. World Economic Forum has cited decrease in oil demand as one of the biggest economic effects of the coronavirus outbreak. IEA, OPEC and EIA revised their earlier demand forecast downwards.  Decrease in Libya’s oil production to less than 300,000 bpd last week, from over 1 million bpd following a blockade of its main oil export terminals and current OPEC+ production cuts are rendering some support to the prices. While equities and oil continued to decline, gold, as a safe haven asset gained earlier this month. However, due to profit booking, it fell on the last day of the month, posting a monthly loss of 0.3%.

Regional Market Trends – February 2020

Equity

Last close

February %

2020 %

S&P GCC

107

-7.4

-8.2

Saudi Arabia (TASI)

7,628

-7.5

-9.1

Qatar (QE Index)

9,490

-9.1

-9.0

Abu Dhabi (ADI)

4,901

-4.9

-3.4

Kuwait (All Share PR Index)

6,072

-4.0

-3.3

Dubai (DFMGI)

2,590

-7.2

-6.3

Bahrain (BAX)

1,660

0.2

3.1

Oman (Muscat SM)

4,131

1.3

3.8

Commodities

IPE Brent($)

 50.5

-13.1

-23.5

Gold($)

 1,585

-0.3

4.5

Source: Reuters

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 Region with total assets under management of over KD 1.14 billion as of 31 December 2019 (USD 3.77 billion). 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"
Tel: +965 2224 8000
Fax: +965 2246 7264
Email: ssaad@markaz.com    
markaz.com  

© Press Release 2020

Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.

The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.

To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.

More From Press Releases