US rate hike, oil fall dominates market sentiments

KUWAIT CITY, Dec 18: All the major KSE indices close in negative as the Fed rate hike had a negative impact on the markets; the rate hike was followed by a swift interest rate hike by Kuwait Central Bank. While on crude oil price the Brent price was at USD 37.04 per barrel while the NYMEX was trading below the USD 40 benchmark at USD 35.15 per barrel; these levels were last seen during 2008/09.

The KSE Price Index closed at 5,623.69 down 62.46 points on a weekly basis; compared to a fortnight the index has shed close to 165 points. The KSX-15 closed at 902.16 down 12.64 points; while the Islamic Index MUDX fell by 0.30% to close at 562.47 during the week.

The weekly volumes stood at 475.25 million shares compared to 554.38 million shares in previous week, a decrease of 14.3%. Among the major contributors Financial Services Sector (contributing 36.46%) the sector witnessed 173.28 million shares of trading compared to 224.51 million shares in the previous week, while Real Estate Sector (contributing 27.92%) saw 136.7million shares of trading compared to 155.87 million shares in the previous week.

The overall Market Cap was down by 1.0% as it stood at KWD 26.13 billion. National Bank of Kuwait – NBK (Mcap – KWD 4.08 billion) saw its market cap remain unchanged, while Mobile Telecommunication Co – Zain (Mcap – KWD 1.46 billion) saw its market cap drop by 5.55 %. While Kuwait Food Company - Americana (Mcap – KWD 763.80 million) witnessed a plunge of 9.52% in its market cap during the week. Counters with gains include Mabanee Co (Mcap – KWD 807.12 million).

The week saw Kuwait Telecommunications Co (Mcap – KWD 494.40 million) disclosing that the Capital Market Authority providing the open offer approval for buy back of 74% of the company shares by STC. During the week the company published the open offer of KWD 1.00 per share with the offer period from the Dec 27, 2015 until the January 31, 2016.

On the total market breadth, of the 56 Islamic Companies, 9 advanced while 30 declined during the week.

The Islamic universe market cap was down by 0.35% to close at KWD 6.84 billion as the universe performed better than the overall market. The universe heavyweight Kuwait Finance House – KFH (Mcap – KWD 2.67 billion) saw its market cap increase by 1.82%; on the back of interest hike by Kuwait Central Bank.

KFH being an Islamic lender is likely to be the key beneficiary of the interest rate hike as it has noninterest paying accounts thus increasing the lender margins. While Boubyan Bank ( Mcap – KWD 897.51 million) remained unchanged during the week. Among losers, Kuwait Telecommunications Co (Mcap – KWD 494.40 million) saw its market cap plummet 8.33% during the week.