‘Population growth rate figures not appalling’
March real estate market liquidity up m-o-m
RPopulation
eading of ancient and contemporary history reaffirms that development does not succeed unless it is identified and associated with the state and failure to achieve it is the mate of failure in the nation-building. The above is a conclusion of reviewing four centuries of modern and ancient history and the summary of a nice book entitled “Why Do Nations Fail”. One of the most important foundations of any state is its effective policy to ensure its financial and economic stability, sustainability, neutrality and strength of its legal network, reinforcement of citizenship value, i.e. the identity so much so that some states’ constitutions mobilize their fleets in defense of their citizens, says Al-Shall Economic Report prepared by Al-Shall Consulting Co headed by Jassem Al-Saadoun.
In Kuwait, what is happening is running completely opposite of the requirements of building the foundations of a state. Successive governments have become addicted to buying political loyalty by money at the expense of competitive economy and the State’s financial sustainability, which is a devastating tool, picked up by opponents and loyalists alike and became addicted to using it to the extent that Kuwait currently in financial and economic trouble. The government harnessed laws to serve short-term special goals, which was picked up by opponents and supporters and laws have become drafted in favor of this party or against that party who is in a position of strength, to achieve short term political gains. The country has become a hotbed of corruption, and the second state foundation has been shaken. Not only that but tampering did not spare the national identity which was used not to bolster affiliation to the country, but to support one party against another in accordance with the political game in a certain condition, and was branded by grant or bonus-a house and a job-for loyalty, even if it violates the law as long as this loyalty is for a party in power. Trading in it has become an available tool for the government’s antagonists and supporters.
If these three foundations are shaken, the whole construction they are built on is also shaken. In prudent states, wise people do not allow constant aggression on those rules. The shocking model presented today is the debate about the indigenous citizens in which each party got involved except the government to the extent that each party gave itself the right to search the entitlement of the other to citizenship, which is a unique sedition! Deciding this debate is a too simple matter, i.e. the government presents the correct numbers, which it owns, and limits the scale of manipulating the nationality files, if any, and deals with it in accordance with the law, not according to the political position. Until the government publishes its numbers to contain the sedition that deeply disturbing the already torn community, under dark regional conditions, we will publish population figures from two Government sources. Those official numbers, if true, and if we compare them with the regional figures reaffirm that the problem scale is much less than the estimates of some.
The maximum biological limits for the natural growth rates — births minus deaths — are 4%, but no one scores this ratio by natural increase. It has been customary for the maximum natural growth to reach 3.6%. Whether the increase reaches this maximum rate or less, the increase is the outcome of law, i.e. naturalization. Separation between the two ratios is quite easy in any state that is interested in the identity and keeps correct or valid records, both are present in Kuwait. Figures of population growth in Kuwait, see table (1), do not suggest appalling figures. Reading through the comparative figures with neighboring countries, it is clear that rates of population growth of small and wealthy states, is higher than in others, the so-called the result of the wealth impact. Arranging the population growth rates for citizens, the UAE is the highest in growth, then Qatar and then Kuwait, though without big differences among and with the other three states, which also do not suggest appalling figures.
Therefore, we call for quiescence and for wise and urgent government intervention by publishing and analyzing the figures while allowing law to be implemented starting with the official who sanctioned forgery or tolerance in verification and scrutiny and ending with the fraudulent. But holding inspection courts undertaken by citizens or political investigation committees is first an approach which did not succeed in big powers and is secondly subject to a large amount of spiteful and political caprice and their outcome is sowing discord and hatred in a small country that can’t bear it under the worst and most dangerous geopolitical conditions.
Domestic Real Estate Market March 2017
The latest released data by the Ministry of Justice — Real Estate Registration and Authentications Department — (after excluding the craft activity and the coastal strip) indicate rise in the real estate market liquidity in March 2017 vis-a-vis February 2017 liquidity. Total value of contracts and agencies trading scored KD 304.5 million which is higher in value by 84.6% than its counterpart value in February 2017 which scored KD 164.9 million. It also rose by 23.9% compared with March 2016 liquidity. We have no explanation other than liberating some blocked savings in stocks after the activity at Boursa Kuwait since the beginning of the year which drove individuals to purchase private residence after restoring those savings simultaneous with some looseness in real estate prices.
Real Estate trading during this month was distributed between KD 255.3 million in contracts and about KD 49.2 million in agencies. Real Estate deals scored 614 with 436 deals went for contracts and 178 deals went for agencies. The highest rate went to Mubarak Al Kabir Governorate by 252 deals representing about 41% of the total number of real estate deals. Ahmadi Governorate came second by 155 deals representing about 25.2%. The lowest share went to Al Jahra Governorate by 25 deals representing about 4.1%.
Value of private residential trading scored KD 211.9 million, up by about 146.7% compared with KD 85.9 million in February representing 69.6% of total real estate trading vis-a-vis 52.1% in February 2017. The monthly average value for private residence trading in the last 12 months scored about KD 93.4 million. This means that trading value in this month was higher by 126.9% than the average. The number of deals for this activity also rose to 528 deals in March 2017 versus 251 deals in February 2017. Therefore, the average value per deal of private residence activity scored about KD 401.4 thousand.
Investment housing activity went up to about KD 72.6 million, up by 29.6%, vis-à-vis KD 56 million in February 2017. However, its percentage out of total liquidity dropped to about 23.8% versus 33.9% in February 2017. Monthly trading average value of investment housing during 12 months scored KD 65 million. This means that trading value in March was higher by 11.7% than the 12 months’ average. Its deals dropped to 81 (120 deals in February). Therefore, the per deal average value for investment housing scored KD 895.8 thousand.
Commercial activity trading value dropped to about KD 20 million, a drop by -13.2% compared with KD 23 million in February 2017. Its percentage out of total real estate trading value declined to 6.6% compared with 14% in February 2017. Average value of commercial activity trading in 12 months scored about KD 41.9 million. This means total trading in this month is lower by -52.2% compared with 12 months’ average. Its deals scored 5 deals (7 deals in February 2017). As such, the average value per deal for the commercial activity scored about KD 4 million. There were no deals in the warehousing activity.
When we compare March 2017 trading with the same month of last year (March 2016), we note a rise in the real estate market liquidity from about KD 245.8 million to KD 304.5 million, i.e. 23.9%. The rise involved the private residence activity by 100.6% up from KD 105.6 million in March 2016. It rose by KD 211.9 million in March 2017. The investment housing activity declined by -12.7% and the commercial activity liquidity dropped by -65%.
When we compare sales of the first quarter of last year in 2016, we note a decline in total liquidity by -11%. Sales of first quarter of last year scored KD 735.4 million and declined to KD 645.8 million in the last quarter. The decline involved the investment housing and the commercial activity by about -28.8% and -55.8% respectively. But private housing activity rose by 35.1%.
Renewable Energy and Oil
“BP Future Energy Outlook” report issued in January 2017 projects increasing demand on energy by about 30% by the year 2035, an average annual growth of 1.3%, which is logical. But the importance of the report lies in the different increase in the components of that demand. In brief, it includes the drop in the fossil fuel contribution, including oil, from 86% of the total current energy sources to 75% by 2035. It will be achieved-according to their estimates-due to superior growth rates of demand on renewable energy to approximately 7.6%, or slightly less than 6 times the overall growth rate with solar and wind energy taking the lead.
That Outlook supports the likelihood of oil prices remaining weak. The price of a barrel of oil which scored US$ 52.8 in the end of the first quarter is anticipated at best to score about US$ 61 per barrel in the foreseeable future. Because parity prices — balanced budget — in the vast majority of oil-producing States exceed expected oil prices, even at their best, and because the internal increase on demand on oil for local consumption reduces available available-for-export quantities and raises the budget parity price, some States began to encourage renewable energy production.
The report of the International Renewable Energy Agency — IRENA — indicates that Gulf oil-rich countries will save 400 million barrels of oil by 2030, or a reduction by nearly 25% of their oil consumption of oil for electricity generation and water production if they achieve the declared goals of expansion in the use of renewable energy. The report stressed that Gulf countries can achieve additional financial revenues estimated at US$ 55-87 billion during (2015 – 2030) if they move to integrate the renewable energy plans and projects. The number of renewable energy projects in the Gulf States scored 37 projects completed, under construction or being planned, most of them are solar energy (27 projects), 4 for waste conversion, 3 for wind energy and 3 projects are mixed projects for renewable energy sources.
The UAE is one of the first six Gulf States which began investing in renewable energy. It owns about 68% of energy production capability in the region and about 10% of the global capacity. It is planning to produce approximately 24% of its total energy consumption from renewable energy sources by 2021. Saudi Arabia is currently more active in establishing specialized institutions and authorities in the support and encouragement of renewable energy in the region. Renewable energy was highlighted in the Vision 2035 in Kuwait which aims to secure about 15% of domestic consumption of electricity using renewable energy, it is expected to save more than US$ 2.463 billion annually if realized.
In conclusion, addiction on reliance on oil, both income and consumption, recorded an advanced sick case. The oil age even if it continues for 5 forthcoming decades began being replaced by renewable energy. The prudent is the one who works in advance to introduce a real programmed reduction in relying on oil, both in income and in consumption. Working in both directions is available and possible. Limiting oil consumption is indirectly a positive factor for reducing dependence on oil revenues. The United Arab Emirates offers a successful model and it is fine to benefit from their experience, indeed and not by words.
National Bank of Kuwait (NBK) Financial Results – First Quarter 2017
NBK announced results of its operations for the first quarter of 2017, which indicate that the bank’s net profits, after deducting taxes, scored KD 89.7 million, a KD 7 million, or by 8.5%, vis-avis KD 82.7 million in the first quarter of 2016. The bank achieved net profit for its shareholders about KD 85.4 million versus KD 78.9 million in the same period of last year, i.e increased by KD 6.5 million. The rise in the bank profits is due to the rise in the total operational income by a higher value than the rise in total expenditures.
In detail, net operations income rose by KD 16.2 million, or by 9%, and scored KD 195.4 million versus KD 179.2 million in the same period of last year. That resulted from rise in all operations income items, such as interests’ income item (excluding for income from Islamic financing) rose by KD 12.5 million and interests’ expenses (excluding Murabaha expenses) rose by KD 4.6 million, therefore the net interests’ income rose by KD 7.9 million. The bank also achieved net income from Islamic financing by KD 25.9 million (KD 23 million in the same period of last year), which increased net interests’ income (traditional and Islamic) to about KD 147.5 million (KD 136.6 million), a rise by KD 10.9 million. Likewise, investments item rose by about KD 3.7 million and scored KD 5.1 million versus KD 1.5 million.
Total operations expenditures increased by a less value than the rise in total operational income by about KD 2.9 million, or by 4.9%, and scored KD 61.5 million versus KD 58.7 million in the first quarter of 2016. This was achieved due to the rise in the item of staff expenses by KD 2.6 million and scored KD 36.5 million versus KD 33.9 million. According to AlShall estimates, assuming the exclusion of the impact of consolidating Boubyan Bank’s results on operational expenses, the increase in operational expenses would be from about KD 48 million to about KD 49.2 million, i.e increased by 2.5%. Total provisions scored KD 37.7 million, rose by KD 6.8 million compared to KD 30.9 million.
The bank financial statements indicate the bank’s total assets increased by KD 610.2 million, or by 2.5%, compared with the end of 2016, which scored KD 24.814 billion and rose by KD 142 million, or by 0.6%, when compared with the total in the end of the first quarter of 2016. If we exclude the impact of consolidating Boubyan Bank, it will decrease by 1.3%. Portfolio of loans, advances and Islamic financing to customers, the largest contributor of the bank’s assets, increased by 3.2%, KD 437.3 million, to KD 14.049 billion (56.6% of total assets) versus KD 13.611 billion (56.2% of total assets) in December 2016. It increased by KD 489.3 million, or by 3.6%, when compared with the end of the first quarter of 2016. If we exclude the impact of consolidating Boubyan Bank in its Islamic financing part, it will increase by 0.8%. Percentage of non-performing loans to the total credit portfolio scored 1.27% in the end of March 2017 compared with 1.32% in 2016. The coverage percentage of the non-performing loans increased to 348% compared with 335%.
Figures indicate that the bank liabilities (without including total equities) increased by KD 668.4 million, or by 3.2%, and scored KD 21.468 billion compared with the end of 2016. While it decreased by KD 122.5 million, or by 0.6%, if compared with the total in the end of first quarter of the last year. Excluding the impact of consolidating
Boubyan Bank, the retreat will be about 2.3%. Percentage of total liabilities to total assets scored 86.5% compared with 87.5%.
Results of analyzing financial statements calculated on annual basis indicate that most of the bank’s profitability indexes rose compared with the same period of 2016. The average return on assets (ROA) increased to 1.5% versus 1.4%. Likewise, the average return on equities relevant to the banks’ shareholders (ROE), which scored 12% versus 11.7%. While, the average return on capital (ROC) dropped to about 62.1% compared with 64%. Earnings per share (EPS) rose to 15 fils versus 14 fils for the same period in 2016. (P/E) scored 11 times — improved — compared with 12 times, due to the rise in earnings per share by about 7.1% against a drop in the market price per share by 1.5% compared with its price on March 31, 2016. (P/B) scored 1.17 times compared with 1.15 times.
The Weekly Performance of
Boursa Kuwait
The performance of Boursa Kuwait for last week was less active compared to the previous one, where all indexes showed a decrease, the traded value index, the traded volume index, number of transactions index, and the general index. AlShall Index (value weighted) closed at 388 points at the closing of last Thursday, showing a decrease of about 6.2 points or about 1.6% compared with its level last week, while it increased by 25 points or about 6.9% compared with the end of 2016.
The following tables summarize last week’s performance of Boursa Kuwait
Most Active Sectors & Companies
Table (1) Population and growth rates (1975-2016
Table (2) Population and growth rates comparing with other GCC countries
KUWAIT CITY, April 20: Kuwait stocks swung higher on Thursday stemming the five-day slide which knocked over 200 pts off the main index. The bourse climbed 25.5 points in volatile trade helped by bargain buying in select counters even as the heavyweights closed mixed.
The KSX 15 benchmark fell 3.49 points to 923.34 pts taking the month’s losses to 11 pts while weighted index was little changed at 408.87 pts. The volume turnover meanwhile rose marginally following Wednesday’s dip. 286.35 million shares changed hands — a 4 pct rise from the day before.
The sectors closed mixed. Oil and gas outshone the rest with 3.7 percent gain whereas insurance shed 1.17 pct, the biggest loser of the day. In terms of volume, real estate accounted for the highest market share of 50.4 pct while financial services trailed with 28.9 percent contribution.
In the individual shares Kuwait National Cinema Co soared 100 fils to KD 1.500 recouping last session’s losses and Humansoft Holding followed suit to close at KD 1.320 extending an identical surge on Wednesday.
Zain was unchanged at 450 fils off early highs and Ooredoo too did not budge from its earlier close of KD 1.220 after trading earlier in the red. Kuwait Telecommunications Co (VIVA) slipped 10 fils to 850 fils and Agility stood pat at 630 fils.
Kuwait Food Co (Americana) slid 40 fils and Napesco vaulted 100 fils. The company’s board has proposed 80 percent cash dividends and 73.58 percent bonus shares.
The market opened weak and headed north in early trade. The main index rose sharply to scale the day’s highest level of 6,822.93 points amid brisk buying in select counters and pulled lower. It traded choppy thereafter and managed to wind up with modest gains.
Top gainer of the day, Thuraya spiked 10.87 pct to 204 fils while Sanam Real Estate Co soared 10 pct to stand close behind. Amwal slid 6.85 percent, the steepest decliner of the day and Ream topped the volume with 34.2 million shares.
Mirroring the day’s upswing, the winners outnumbered the losers. 53 stocks advanced whereas 41 closed lower. Of the 145 counters active on Thursday, 51 closed flat. 5,754 deals worth KD 26.7 million were transacted — a 2.8 pct fall in value from the day before.
National Industries Group was unchanged at 120 fils and Gulf Cable too did not budge from its earlier close of 460 fils. Heavy Engineering Industries and Shipbuilding Co paused at 224 fils and Contracting and Marine Services Co followed suit.
Jazeera Airways was unchanged at 580 fils and ALAFCO took in 2 fils to settle at 248 fils. Kuwait Portland Cement Co held ground at 980 fils with razor thin trading and Shuaiba Paper Industries climbed 10 fils to 425 fils.
Kuwait Foundry Co rose 10 fils to 290 fils and Equipment Holding Co added 3 fils. Boubyan Petrochemical gained 20 fils while Al Qurain Petrochemical Co was flat at 335 fils. OSOS slipped 4 fils to 138 fils and Automated Systems Co rose 10 fils.
Shed
Educational Holding Co was up 10 fils at 285 fils and Independent Petroleum Group shed 15 fils. Burgan Well Drilling Co was unchanged at 90 fils and Nafais gave up 10 fils before settling at 150 fils.
Combined Group Contracting Co gained 20 fils on back of over 1.4 million shares and UPAC dipped 20 fils to 740 fils. Yiaco Medical gave up 6 fils and Al Rai Media Group clipped 2 fils.
Kuwait and Gulf Link Transport Co inched 1 fil higher and KGL Logistics Co dialed up 2 fils. Mezzan Holding Co was down 10 fils at 990 fils whereas Zimah Holding inched 1 fil into green with a volume of 1.2 million shares.
In the banking sector, Kuwait Finance House was flat at 510 fils and National Bank of Kuwait slipped 10 fils. Commercial Bank of Kuwait was not traded during the session.
Al Ahli Bank and Ahli United Bank stood pat at 305 fils and 420 fils respectively while Kuwait International Bank was up 5 fils at 255 fils on back of over 2 million shares.
Gulf Bank took in 2 fils and Burgan Bank fell 5 fils to 330 fils. Boubyan Bank added 5 fils whereas Warba Bank stalled at 250 fils.
National Investment Co dialed up 2 fils whereas KIPCO and Kuwait Investment Co held ground at 410 fils and 102 fils respectively. Coast Investment Co was flat at 46 fils and Securities Group Co followed suit.
KAMCO and Bayan Investment Co was unchanged at 94 fils and 48 fils respectively while KMEFIC inched 0.5 fil into red. Al Mal was unchanged at 20 fils with a volume of over 4 million shares and Osoul Investment Co took in 1 fil.
Amwal fell 5 fils to 68 fils and Al Imtiaz added 4 fils. Osoul Investment Co dialed up 1 fil while KFIC and Noor Financial Investment Co paused 50 fils and 53 fils respectively. Securities House Co added 3 fils.
Salhiya Real Estate Co and Mabanee Co were flat at 375 fils and 820 fils respectively while National Real Estate Co dialed up 2 fils. Kuwait Real Estate Co inched 1 fil into red while Tamdeen Real Estate gave up 5 fils.
The market has been largely downbeat during the week. The main index closed lower in four of the five sessions and dipped 192 points week-onweek. It has tumbled 193 points from start of the month and is trading 18.54 pct higher year-to-date. KSE, with 208 listed companies, is the second largest bourse in the region.
In the bourse related news, Al Mazaya Holding net profits soared 31.7 pct to KD 2.59 million in last quarter of 2016 while profits rose 10 pct to KD 10.25 million during the fiscal year of 2016. The board has recommended an annual cash dividend of 8 percent or 8 fils per share.
Gulf Glass Manufacturing Co’s fourth quarter net profit dipped o 64 percent in KD 14,000 from KD 39,000 in same period last year. During the fiscal year of 2016, profits was down 48 percent to KD 1.21 million from KD 2.34 mln in the previous year.
Al Mowasat Health Care has posted KD 1.8 million profits during the fourth quarter of 2016 and for the fiscal year of 2016, earnings rose 35.3 pct to KD 4.52 million from the year before. The board of directors has recommended a dividend payout of 20 percent or 20 fils per share.
Injazzat Real Estate Development has posted a net profit of KD 550,000 in the last quarter of 2016 and during the fiscal year of 2016, the bank earned KD 3.2 million. The board has recommended a cash dividend of 5 percent or 5 fils per share for FY 2016.
Ajial Real Estate Entertainment Company (AREEC) net losses narrowed by 22.7 pct to KD 888,620 from KD 1.15 million in Q4 of 2115. The annual profits in 2016 clocked KD 1.5 million and the board has recommended the distribution of cash dividends at 5 percent of capital.