Boursa Kuwait records best monthly performance

Oil sell-off triggers investor woes despite earnings improvement

Asteep decline in oil prices during November-18 dampened investor sentiment during the month resulting in mixed performance of GCC markets. Kuwait recorded the best monthly performance followed by Bahrain and Qatar, while Dubai recorded the worst monthly performance declining for the fourth consecutive month which pushed the benchmark’s YTD-18 decline to 21%. In addition, despite a late month reversal, Saudi Arabia also declined by 2.6%, led primarily by weak oil prices. Consequently, the aggregate GCC index declined by close to 1.5% during the month, although it remains in the positive territory in terms of YTD-18 returns that stood at 11%. The oil price decline was led by continued oversupply concerns and declining confidence in near term oil demand which resulted in one of the biggest monthly drops for oil prices since 2008. Weak oil prices have also increased the probability of an extension to the oil production cut agreement by the OPEC+ producers. On the other hand, global equity markets were largely positive with the MSCI World Index gaining 2.7% during the month led by mid-single digit gains in Emerging Markets and Asian exchanges. In terms of sector performance, a majority of the industry groups declined during the month. Among the large-cap sectors, decliners included Utilities, Diversified Financials, Transportation and Materials. These declines were partially offset by marginal gains in Telecom and Banking stocks. The Banking sector remained in the positive territory during the month despite a decline in prices of key banking stocks in the UAE. Moreover, the sector continues to boast a YTD-18 return of more than 20%, reflecting strong balance sheets and quarterly earnings. In terms of earnings, most of the GCC exchanges reported positive y-o-y aggregate Q3-18 earnings. Growth came on the back of strong banking earnings which grew by double digits in most of the markets.

Kuwaiti benchmarks recorded the best monthly performance during November-18 with all the indices closing the month in the green. Gains were led by large-cap stocks as seen from the 1.6% gains for the Premier Market index while Main Market index recorded a gain of 0.8% resulting in 1.3% gain for the All Share Index. Large-cap stocks have also supported index gains in terms of YTD18 performance with 10.9% gains for the Premier Market Index while the Main Market index declined by 2.0%. As a result, the All Share Index had a slightly lower gain of 5.8%.

Trading activity remained mixed during the month as a result of higher trades in small-cap stocks. Monthly volume increased by a third to reach 1.9 bn shares during November-18 despite a decline in monthly value traded which dropped by 8.1% to reach KWD 284.8 mn as compared to KWD 309.8 mn during the previous month. A’ayan Leasing & Investment topped the monthly volume chart with 160 mn shares changing hands during the month followed by Gulf Petroleum Investment and Ahli United Bank – Bahrain with volumes of 124.4 mn and 115.9 mn, respectively. In terms of monthly value traded, KFH topped the list with KWD 33.1 mn worth of traded shares followed by Gulf Bank and NBK at KWD 28.7 mn and KWD 27.2 mn, respectively.

Small cap stocks dominated the monthly performance chart during the month, while prominent large-cap monthly gainers included Kuwait International Bank with a gain of 10.5% followed by Human Soft and Viva Kuwait with monthly gains of 9.5% and 8.8%, respectively. Monthly gains in these stocks were led by strong y-o-y growth in Q3-18 earnings. On the decliners chart, ACICO and Heavy Engineering Industries & Shipbuilding featured with declines of 12.8% and 12.0%, respectively, followed by Mezzan Holding at 10.2%.

The Saudi market declined for the second consecutive month in November-18 reeling under the influence of the steep decline in oil prices. The benchmark TASI Index dropped 2.6% during the month, the biggest monthly decline in 9 months to close at 7,703 points after a late month reversal trend failed to offset declines since the start of the month. The decline during November-18 further lowered YTD-18 gains for the market which stood at 6.6%. The sector performance chart also reflected the market weakness with a majority of the sectoral indices closing the month in the red. The Food & Beverage index witnessed the biggest monthly drop of 5.4% after quarterly earnings for the sector more than halved during Q3-18 as compared to Q3-17. Among the large-cap sectors, the Materials index dropped 4.7% while Telecom and Banks declined by 2.0% and 1.8%, respectively.

Quarterly earnings performance for the exchange remained flat at SAR 32.8 bn during Q3-18. However, changes among the sectors varied with higher earnings recorded by Banks, Materials, Real Estate and Telecom offset by decline in profits recorded by Energy, Transportation, Consumer Services, Food & Beverage, Healthcare and Insurance sectors. Banking sector earnings were up by 11% y-o-y during Q3-18 after the listed banks in the Kingdom, with the only exception of Saudi Hollandi Bank, posted positive growth and most of them double digit yo-y increase in Q3-18 earnings. Materials segment also posted a strong y-o-y earnings growth of 10.6% during Q3-18, while on the other hand, earnings for the Energy sector more than halved during Q3-18 as compared to Q3-17.

After declining for two months in a row, the ADX index declined in Nov18 and closed 2.7% lower m-o-m at 4,770.08 points. Market breadth favored decliners, as 16 stocks gained, while 32 stocks declined. Sectoral performance barring the Services sector was negative. The Energy index was the worst performing index on the ADX, declining by 12.6%, driven by double digit declines in crude oil prices, as Dana Gas lost a fifth of its market capitalization, while Abu Dhabi National Energy moved down by 8.9% m-o-m. Investment & Financial Services names followed, as the index receded by 9.9% m-o-m, driven mainly by a decline in the share price of Waha Capital (-9.7%), while Al Khaleej Investment lost 7.9% m-o-m. Real Estate index woes in the UAE continued and reflected on stock prices as well, as the index was down 7.8% m-o-m and was the worst performing index YTD (-26.8%). Within the index, Aldar (-7.5%), Eshraq Properties (9.2%) and Ras Al Khaimah Properties (-8.3%) saw lower levels. For the Services index which gained by 1.2%, larger stocks Abu Dhabi Aviation and National Corp for Tourism & Hotels saw higher levels.

The DFM index declined for the fourth month in a row in Nov-18, and was the worst performing index for the month. The index declined by 4.2% mo-m and closed at 2,668.66 points, as the performance of sectoral indices was mostly negative. Consumer Staples was the worst performing index as the sector plunged by 19.5% m-o-m in Nov-18, driven mainly by a 21.6% decline in the share price of DXB Entertainment. The stock was down over 57% YTD and has been under pressure over questions of discretionary spending in Dubai. Insurance names followed with declines of 15.3% m-o-m, as larger names within the index that were traded witnessed declines. Investment & Financial Services also lost ground by 13.6% m-o-m and were dragged down by Dubai Investment (-16.7%) & DFM stock (4.3%). Real Estate and Construction names continued to remain under pressure, declining by 8.4%, as real estate prices and rents continue to move lower. Transportation was the best performing index as the index went up by 3.0% m-o-m, driven by Aramex, which gained by 7.8%. Telecoms also closed higher by 1.4%, as DU witnessed gains of 1.4% m-o-m.

Qatar was amongst the gainers in the GCC in Nov-18, and continues to lead other regional markets YTD (+21.6%). The QE 20 index improved by 0.6% m-om to close at 10,364.54 points in Nov-18. The Qatar All Share index which maps the broader market, closed 1.8% higher as compared to the previous month. Market breadth was broadly even as 25 companies receded, while 20 companies moved higher as compared to the previous month. Sectoral performance was mixed and included both gainers and losers. Heavyweight indices such as Real Estate and Banks & Financial Services indices closed in the green during the month. Real Estate was the best perform- ing sectoral index, gaining by 10.4% m-o-m, driven by Ezdan Holding and Barwa Real Estate, as the stocks closed 16.4% and 2.2% higher respectively mo-m. The Banks & Financial Services index moved higher by 2.0% and was driven higher by banks mainly -QNB (+2.3%), Commercial Bank of Qatar (+1.8%) and Masraf Al Rayan (+5.5%). After being a worst performer in Oct-18, Telecoms rebounded and gained by 9.2% m-o-m in Nov-18, led by a jump in Ooredoo’s share price (+14.7%). On the decliners side, Industrials was down 2.9% m-o-m, as Industries Qatar (-3.2%), Messaieed Petrochemical (-5.0%) and Qatar Electricity & Water (-4.2%) lost ground during the month.

BSE Monthly Sector Performance Monthly Value Traded (BHD Mn)

The Bahrain Bourse was amongst the best performing GCC indices in Nov18, closing in the green for the month. The Bahrain All Share Index closed at 1,328.81 points and moved up by 1.1% m-o-m. Sectoral performance was mixed, but more sectors gained during Nov-18. The Investment index was the best performing index as the sector gained 3.9% m-o-m, driven by United Gulf Holding Company as its share price jumped by 29.5% m-o-m. Industrials also gained by 1.7% m-o-m, driven solely by Aluminium Bahrain, as the bellwether gained by 1.7% m-o-m. Gains from Batelco (+4.8%) and Bahrain Duty Free Complex (+1.4%) also ensured that the Services index moved up by 1.7%. Commercial Banks however declined by 0.6% m-o-m in Nov-18, as Al Khaleeji Commercial Bank (-8.9%) and Al Salam Bank (-7.1%) pulled down the index.

Trading activity in Nov-18 was down on an m-o-m basis, as compared to Oct18. Volumes traded in the exchange reached 85.4 mn and declined by 32.5% m-o-m as compared to 127 mn shares in Oct-18. Value traded decreased by 18.6% in the exchange to reach BHD 23.5 mn in Nov-18. The number of trades made in the exchange went down to 1,265 trades, down 26.5% m-o-m from Oct-18. AUB was the most actively traded stock in Nov-18 with BHD 16.6 mn worth of its shares traded on the exchange. GFH and Batelco followed with BHD 1.7 mn and BHD 1.1 mn worth of shares traded. Of the 12 stocks that closed in the green in Nov-18, United Gulf Holding Company topped the gainers list, as it witnessed a 29.5% m-o-m increase, followed by Batelco with monthly gains of 4.8%. Al Khaleeji Commercial Bank was the main laggard, as it witnessed a m-o-m decline of 8.9%, followed by GFH and Al Salam Bank with monthly declines of 8.8% and 7.1% respectively.

Muscat Securities Market dropped for the second consecutive month during Nov-18, although marginally to reach 4,412.1 points. The decline came after all the three sectoral indices declined during the month. The Industrial index dropped 1.6% followed by Services index at –1.5% while the drop in the Financial index was marginal at –0.5%. Within the Industrial index, gains recorded by Al Maha Ceramics (+5.1%) and Al Anwar Ceramic Tiles (+2.56%) were more than offset by declines recorded by Oman Cement (-4.43%)and Voltamp Energy (-2.21%). Ominvest (-5%) was the biggest decliner in the Financial sector followed by Bank Sohar (-3.2%) and Al Sharqia Investment Holding (-3.2%). These gains were partially offset mainly by 1% gains in Bank Muscat (+1%).

Trading activity in the main market declined marginally during the month. Total volume traded declined by 6.2% to reach 78.7 mn shares in November-18 as compared to 83.9 mn shares during October-18. Monthly value traded declined at a higher pace of 11.1% to reach OMR 17.7 mn as compared to OMR 20 mn during the previous month.