Real estate liquidity surges during March
Kuwait exports total KD 4.636 bln in Q4, 2017 Al-Shall Index
TEarly Retirement
he concern in Kuwait is no longer revolving around the progress in construction and development indicators but on slowing down the sabotaging processes hoping that its public administration would wake up one day and begin to reform while the performance potentials are still available. After a systematic and sustained sabotage to the public financial conditions which multiplied by 5 times in slightly more than a decade, yet with very low productivity compared to its small and old size, the turn now is for the destruction of the security network to hundreds of thousands of retirees or those who will retire by tampering with their social security system by the incompetent legislative and executive parts of the public administration by adopting the first deliberation last week of early retirement and pension replacement, says Al-Shall Economic Report prepared by Al-Shall Consulting Co headed by Jassem Al-Saadoun.
In all countries of the civilized world when figures indicate that there is something wrong with the public finance, visions of its reform take the lead and include first and foremost raising the retirement age despite the discomfort it causes in the short time and perhaps the political cost. That recipe included Europe’s sovereign debt crisis states at the beginning of the current decade which extended to other states on the continent and outside. In Kuwait, with the world’s biggest public sector now and throughout history, which employs approximately 77% of indigenous labor force, and supports others outside it, and where the contribution of public finance to pension premiums is the highest in the world too which equals 3 times the employee’s contribution, the general Board of the Social Security’s seeks to adopt populist laws which are entirely contrary to the reform policy.
In any country in the world with a minimum limit of patriotic sensation and while its public administration works on a temporary basis, its purpose and concern is the survival of its homeland after it quits. What if that country is struck, and in less than a decade, with the consequences of a financial crisis that shook the world, and with devastating geopolitical violence and then by diminishing or reduced financial resources to nearly half. The top priorities of its public administration include extinguishing the financial fire and reallocating financial resources to ensure their sustainability. That means working first on ensuring the sustainability of its financial stability which suffers from a fundamental expanding disorder and directing all resources to create sustainable employment opportunities for its citizens who currently lack the capacity in an inflated public sector. In Kuwait, not only the sustainability of public finance and economy is threatened, sabotage will affect securing the minimum level of future security of those who left or will leave the labor market for tampering with their social security system savings. This happens in the post global financial crisis when acceptance with lower income return on the savings investments has become an indisputable fact.
The early retirement project has been tried on the three military institutions and the oil sector and was drained from best employees and led to low performance because most vacant leadership positions were replaced with destructive parachute connections employments. It is the award of most deputies who are in support of the project. The only goal of those who support the project is to guarantee sustainable chairs in the two powers, the legislative and the executive, at the expense of the sustainability and stability of the country. The bottom line is huge harm to the retirees under the saying “(He) took from his bag and paid for his gift”.
Local Real Estate Market –
March 2018
The latest released data by the Ministry of Justice — Real Estate Registration and Authentications Department- (after excluding the crafts activity and the Coastal Strip System) indicate a great rise in real estate market liquidity during
File photo shows traders at Boursa Kuwait floor. The market edged lower on Thursday.
March 2018 versus February 2018 liquidity. Total value of contracts and agencies traded during March scored KD 364.6 million which was a 80.1% rise than its counterpart value in February 2018 which scored KD 202.4 million. But it rose by 19.7% compared with March 2017 liquidity.
Trading during March 2018 was distributed between KD 354.8 million to contracts and about KD 9.8 million to agencies. Number of real estate deals in this month scored 601 deals of which 572 contracts and 29 agencies. The highest share in real estate deals went to Al Ahmadi Governorate by 179 deals representing about 29.8% of the total number of real estate deals. Mubarak Al Kabeer Governorate came second by 135 deals, or about 22.5%. The lowest share went to Al Jahra Governorate by 50 deals, representing about 8.3% of the total.
Value of private residential activity scored KD 121 million, up by 18.7% compared with KD 101.9 million in February 2018. Its contribution percentage dropped to 33.2% of the total real estate trading versus 50.4% in February 2018. The monthly average value for private residence trading in the last 12 months scored KD 104.1 million. This means that March trading value is higher by 16.2% than the average. The number of deals for this activity rose to 394 deals versus 290 deals in February 2018. Accordingly, the average value of private residence activity deal scored about KD 307 thousand versus KD 351 thousand in February 2018, a -12.6% drop.
Value of investment housing activity scored KD 157.2 million, up by 76.3% from KD 89.1 million in February 2018. Its contribution to total liquidity dropped to about 43.1% versus 44% in February 2018. Monthly trading average value of investment housing during 12 months scored KD 73.6 million. This means that trading value during March 2018 was higher by 113.5% compared with 12 months’ average. In addition, its deals rose to 189 deals compared with 70 deals in February 2018. Therefore, the average value per deal for investment housing scored KD 832 thousand versus KD 1.27 million in February 2018, i.e. -34.7% drop.
Commercial activity trading value rose also to KD 84.5 million, up by 645.6% compared with KD 11.3 million in February 2018. Its percentage out of total real estate trading value rose to 23.2% compared with 5.6% in February 2018. Average value of commercial activity trading in 12 months scored about KD 32.9 million. This means that total trading value in March was higher by 157% than the last 12 months’ average. However, its deals scored 17 deals compared with 5 for February 2018. The average value per deal for March 2018 scored KD 5 million versus KD 2.3 million average for February 2018, a 119.3% rise. There was one deal for stores activity in March worth KD 1.9 million.
When we compare total March 2018 trading with March of 2017, we note that liquidity rose in the real estate market from about KD 304.5 million to KD 364.6 million, i.e. 19.7% as mentioned previously. The rise included the commercial and investment activities by 322.6% and 116.6% respectively, while the private residential activity liquidity dropped by -42.9%.
When we compare sales of the first quarter of this year with the first quarter of 2017, we note a rise in total liquidity by 23.8%. Sales of the first quarter of this year scored KD 810.5 million versus KD 654.8 million in the first quarter of 2017. The rise included the investment and commercial residence by 92.6% and 44.9% respectively while private residence trading dropped by -16.7%.
Monetary and Economic Indicators (October – December
2017)
The Quarterly Statistical Bulletin (October — December 2017) issued by the Central Bank of Kuwait (CBK) and published on its website, provides some economic and monetary indicators that are worth following-up. We will mention some of those indicators for the purpose of documenting their development. An example is the balance of trade (commodity exports minus commodity imports) which achieved a surplus in the 4th quarter of 2017 by KD 1.938 billion as Kuwait’s exports during this quarter scored KD 4.636 billion, of which 91% were oil exports. Total commodity exports for the entire year of 2017 scored about KD 16.659 billion, of which 89.7% were oil exports. Commodity imports — excluding military- during the 4th quarter of 2017 were at KD 2.698 billion. And the value of commodity imports -excluding military- for the entire year of 2017 scored KD 10.191 billion. Balance of trade achieved a surplus in the 1st quarter of 2017 at KD 1.625 million, and decreased in the 2nd quarter to KD 1.472 billion, and continued decreasing to KD 1.433 billion in the 3rd quarter. Overall, the balance of trade achieved a surplus at KD 6.468 billion in the year 2017 which is higher by 38.4% than KD 4.672 billion achieved in 2016 and that resulted from the oil prices improvement.
Consumer prices index in 2017 achieved a positive growth by 1.5% as its average was 112.3 (in 2013=100), up from 110.6 in 2016, which comes within the reasonable limits. This growth is due to the dominating effect of transport prices from 107 in 2016, to 117.9 in 2017 (+10.2%).
The bulletin indicates a continuous increase in the weighted interest rates of balances on deposits from 1.617% in the 3rd quarter to 1.621% in the 4th quarter, (a quarterly growth rate by 0.25%). It decreased from 1.624% in 2016 to 1.619% in 2017, (a yearly decrease by -0.3%). The weighted interest rates of balances on loans increased from 4.736% to 4.749%, (a quarterly growth rate by 0.3%). Likewise, it increased from 4.477% in 2016 to 4.695% in 2017, (a yearly increase by 4.9%).
Private sector deposits volume at local banks scored KD 35.401 billion, up from KD 34.132 billion at the end of 2016, (an increase of 3.7%). Finally, local banks’ claims on the private sector went up to KD 37.225 billion, from KD 36.201 billion in 2016, (an increase of 2.8%).
Profits of Listed Companies 2017
148 listed companies, 94.9% of total listed companies (156 companies) announced results of their operations for the fiscal year ending December 31, 2017 after excluding 4 companies which did not announce their financial results and 4 other companies with different financial year. Total profits of those companies scored KD 1.850 billion, up by 10.1% above profits of the same companies in 2016 which were KD 1.680 billion. Rise in profitability is a good matter but there is doubt over its continuity because the source of most of that increase came from the temporary boursa activity in the beginning of last year and the end of the third quarter or due to the increase in public sector’s demand on banking loans to finance its projects which coincided with weak private sector’s demand on banks’ loans. There is no guarantee for both factors’ continuity.
Number of gainers was 87 companies including 60 companies which increased their profits. 27 companies reduced their losses or became profitable. This means that 58.8% of the companies which announced their results improved their performance. (81 companies from the same sample were gainers in 2016). Number of losers was 61 companies including 23 companies which moved from profits to losses, 38 companies reduced their profits versus 67 companies, including 25 companies moved from profitability to loss and 42 companies reduced their profits in the end of 2016.
At the top list of profitable companies, 10 leading companies achieved the highest profit value by KD 1.196 billion, 64.6% of total absolute profits of all listed companies led by “National Bank of Kuwait” which achieved KD 322.4 million. “Ahli United Bank” Bahrain branch, came second by KD 187.7 million. “Kuwait Finance House” came third by KD 184.2 million. On the contrary, 10 companies achieved the highest absolute losses by KD 87.1 million with “Ithmaar Holding Co” achieving the highest loss level by KD 25.6 million followed by “YIACO Medical Co” by KD 9.6 million.
8 sectors out of 12 active ones achieved growth in their profit level versus their performance in the end of 2016. The best was the banking sector which increased its profits from KD 930.7 million to KD 989.5 million, absolute rise by KD 58.8 million. The most retreating sector was the Healthcare sector whose profits dropped from KD 6.3 million to KD 1.4 million loss (KD 7.7 million retreat).
On the other hand, 83 companies announced their desire to distribute profits including 66 companies which announced intentions to distribute cash profits, 4 companies announced intentions to distribute bonus shares only, 13 companies announced mixed distributions, and 65 companies announced no distributions.
Profitability indexes for all listed companies. ROE index rose to about 7% (6.2% in 2016), ROA index rose to 1.5% (1.4% in 2016). P/E index retreated -improved- to about 14.5 in the end of 2017 from 15.5 times in the end of 2016, indicating improvement in their deviation to harmful speculation.
The Weekly Performance of
Boursa Kuwait
The performance of Boursa Kuwait for last week (4 working days due to “Al-Israa & Al-Miraj” holiday) was mixed compared to the previous one, where the traded volume index and the number of transactions index showed an increase, while the traded value index and the general index showed a decrease. AlShall Index (value weighted) closed at 387.3 points at the closing of last Thursday, showing a decrease by 1.4 points or by 0.4% compared with its level last week, while it increased by 0.3 points or about 0.1% compared with the end of 2017.
Most Active Sectors & Companies