Kuwait price in­dex ended Oct with a mar­ginal gain


Kuwait Times - - BUSINESS -

KUWAIT: Kuwait Financial Cen­tre “Markaz” re­cently re­leased its Monthly Mar­ket Re­search re­port. In this re­port, Markaz ex­am­ines and an­a­lyzes the per­for­mance of eq­uity mar­kets in the MENA re­gion as well as the global eq­uity mar­kets for the month of Oc­to­ber. MENA mar­kets ended mostly in red dur­ing the month of Oc­to­ber 2015 al­though global mar­kets strong gains for the same pe­riod. Abu Dhabi (4.0%) suf­fered the most, fol­lowed by Saudi Ara­bia (3.8%), Dubai (-2.5%) and Bahrain (-2.0%). De­spite the slight in­crease in oil prices dur­ing Oc­to­ber, the over­all drop of oil prices con­tinue to strain the MENA mar­kets. The re­gional mar­kets are also re­spond­ing to in­sta­bil­ity in the global econ­omy and gov­ern­ments mone­tary tight­en­ing in re­sponse to low oil prices. KSA is con­tem­plat­ing spend­ing cuts and tax in­creases to man­age its fis­cal deficit. Egypt (3.1%), Oman (2.4%) and Qatar (1.2%) mar­kets gained in Oc­to­ber. Kuwait’s price in­dex ended the month of Oc­to­ber with a mar­ginal gain of 0.9%. On the con­trary the Kuwait weighted in­dex re­mained stag­nant.

Global eq­ui­ties ended the Oc­to­ber month with strong gains af­ter a sharp fall in Au­gust and Septem­ber, which was fu­eled by fears over the global slow­down, with China as the epi­cen­ter. Oil prices rose af­ter the U.S. oil rig count fell for a ninth straight week, in­di­cat­ing po­ten­tially lower crude out­put in com­ing months in the face of a global sup­ply glut. Sub­dued wor­ries about slow­ing Chi­nese growth, proac­tive ap­proach of rate cuts by Peo­ple’s Bank of China to stim­u­late the econ­omy and in­vestor’s pos­i­tive re­sponse to U.S. Fed­eral Re­serve con­tin­ued lower in­ter­est rates low and the Euro­pean Cen­tral Bank fur­ther eas­ing are some of the key rea­sons that fu­eled the rally of the Global eq­uity mar­kets in Oc­to­ber.

Markaz re­port added that MENA mar­kets liq­uid­ity gained some mo­men­tum in Oc­to­ber, with vol­ume in­creas­ing by 12% and value traded by 14.2%, post the lulled mar­ket ac­tiv­ity. How­ever, Abu Dhabi, Dubai and Bahrain are a few ex­cep­tions where the trad­ing ac­tiv­ity de­clined. Morocco showed the most im­prove­ment with value traded in­creas­ing by 33.3% and vol­ume traded in­creas­ing by 58%. With the value traded de­clin­ing by 79% and vol­ume by 68%, Bahrain’s mar­ket liq­uid­ity was worst hit.

The re­port pointed out that Emi­rates Telecom (UAE) has ben­e­fited from its de­ci­sion to al­low for­eign and in­sti­tu­tional in­vestors to own its shares from Mid-Septem­ber and has ral­lied since then. De­spite the drop of 9% in Q3 prof­its, it man­aged to be the top gainer (7%) in Oc­to­ber, fol­lowed by SABIC (KSA) and NCB (KSA) which gained 4.8% and 4.5% re­spec­tively. First Gulf Bank (-11.5%), Na­tional Bank of Abu Dhabi (-8.6%) and Al Ra­jhi Bank (-5.9%) were the top three losers in Oc­to­ber. With the top three losers be­ing banks, it is ev­i­dent that banks in the re­gion are grap­pling with mar­gin pres­sures and liq­uid­ity is­sues as the oil pro­duc­ing states face a squeeze on bud­gets from lower oil prices.

Saudi Ara­bian Gov­ern­ment is ac­tively pur­su­ing sev­eral ini­tia­tives to keep its fis­cal bud­get deficit in check. Saudi Ara­bia is con­sid­er­ing rais­ing do­mes­tic fuel prices; the ex­ist­ing sys­tem of sub­si­dies in the king­dom is blamed for waste and surg­ing fuel con­sump­tion. Saudi Ara­bia’s gov­ern­ment was in talks with lo­cal banks to sell them 20 bil­lion riyals ($5.3 bil­lion) of lo­cal cur­rency bonds.

Iran will of­fi­cially no­tify pro­ducer group Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries (OPEC) in De­cem­ber of its plans to raise its crude oil out­put by 500,000 bar­rels per day (bpd). Kuwait said there were no calls within OPEC to change the oil group’s pro­duc­tion pol­icy and that lower out­put from high-cost pro­duc­ers could sup­port prices in 2016, adding to signs OPEC will keep its strat­egy of de­fend­ing mar­ket share. Mean­while, OPEC fore­cast in a monthly re­port that de­mand for its oil in 2016 would be much higher than pre­vi­ously thought as lower prices curb US shale oil and other ri­val sup­ply sources, re­duc­ing a global sur­plus. US oil drillers re­moved 16 rigs in the week ended Oct. 30, bring­ing the to­tal rig count down to 578, the least since June 2010.

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