Global markets record strong gains in Q4

GCC equities mostly positive in 4th quarter as Kuwait outperforms

AReport prepared by NBK

fter losing momentum in the third quarter, global equities rallied in the fourth quarter, rounding off a strong year for equities. Easing trade tensions, positive corporate earnings, lower interest rates, and signs of improvement in macroeconomic data have led to a restoration of investor confidence and in a return of bull markets.

Emerging markets led quarterly gains, trailed closely by US and other developed markets; GCC markets, somewhat weighed down by geopolitics, underperformed but still booked decent gains in 4Q2019. The strong fourth quarter performance ended the year with strong gains where the MSCI World Index recorded a remarkable 24% y/y, led by the S&P500 which rose by a solid 29% y/y, extending the record-long US bull-market into its tenth year.

Global equities performed well in the fourth quarter, with the MSCI World up a solid 7.1% q/q led by the emerging markets and the S&P500, which gained 9.1% and 8.5% q/q, respectively.

Markets were supported by a deescalation of trade tensions following the announcement of a phase one USChina trade deal in November 2019, which was signed on Jan 15. Markets were supported by three Federal Reserve rate cuts between August and October, and more importantly by signs of improvement in economic data, alleviating previous economic slowdown concerns; the US labor market remains robust and the slowdown in quarterly growth appears to have stabilized. Additional support came from mostly good US corporate earnings, which helped bolster investor confidence during the quarter. Chinese stocks were helped by the inclusion of Chinese A-shares in the MSCI-EM Index, raising the weight of the country in that index.

Meanwhile, European stocks posted decent gains with the Euro Stoxx 50 up 5% q/q partly supported by ECB expansionary monetary policy, despite continued sluggishness in economic growth.

GCC markets’ performance was generally positive in 4Q2019 with the MSCI GCC up 3.7% q/q, lifted by Kuwait (+11%), Bahrain (+6%) and Saudi Arabia (+4%). Meanwhile, Qatar and Abu Dhabi posted minimal gains, while Dubai and Oman were slightly negative. While escalating geopolitical risk and oil price volatility impacted most regional markets, Kuwaiti equities benefitted from strong sentiment and capital inflows ahead of the recently confirmed MSCI EM inclusion, which will be implemented in May 2020. This inclusion is expected to generate sizeable passive and active inflows, which will support the market going forward into 2020. The fourth quarter also saw the successful conclusion of two large IPOs in Kuwait: the Boursa Kuwait IPO and the North Al-Zour one, whereby both were oversubscribed and to be listed in the official market later this year, with the Boursa Kuwait stock already trading on the OTC market.

The positive expectation for Kuwaiti equities was reflected in the record net foreign inflows recorded in 2019, at about KD 600 million ($2bn). Bahraini equities on the other hand were supported by good progress towards economic reforms and fiscal consolidation, which may have helped restore economic stability and in turn investor confidence. The Saudi market performed decently, up 3.7% q/q as investors shrugged off some concerns following the (largely contested and perhaps unwarranted) downgrade of its sovereign credit rating by Fitch in October. The weakest performers, Dubai and Oman were likely hindered by the absence of market catalysts and economic challenges.

With the slowdown in global growth appearing to stabilize, and with trade tensions easing, the outlook for equities in 2020 appears good. The consensus view is that the US equity rally will moderate but continue to be positive in 2020. With that said, it is prudent to bear in mind certain risk factors, first of which is the possibility of no further progress in US-China trade negotiations (only phase one has been struck, with most tariffs still in place) and even the likelihood that this deal may be unwound (unilaterally) given any future disagreement or lack of compliance. Secondly, a maturing business cycle and elevated valuations (especially in the US) resulting from a record-long rally may lead to the unwinding of positions (profit taking) by investors. Thirdly, no further support is expected from a reduction in the interest rates by the Fed and if anything, the rates might increase especially if there are signs that inflation is inching upward, and last but not least geopolitical risk and oil price volatility continue to loom, especially for the GCC region. For Kuwait specifically, given that the past two year rally was driven in large part by multiple benchmark index inclusions, a fresh catalyst may be needed to fuel the market beyond the May 2020 MSCI upgrade. Our equities outlook in 2020 is therefore one of cautious optimism.

KUWAIT CITY, Jan 28: Celebrating the family spirit during Hala February season, Mohamed Naser Al Sayer & Sons, a subsidiary of ALSAYER Holding has announced one of its kind track and family event for Toyota which will be held at Kuwait Motor Town. on Friday, Jan 31 and Saturday, Feb 1.

The opening session for this event which is scheduled to start at 10.00 AM will be attended by ALSAYER Board of Directors, Top Management Team, Toyota Group Sales, affiliates and partner brands of ALSAYER, valued Toyota customers and distinguished members from press and media.

Visitors will also benefit from a unique test drive to experience outstanding driveability of Toyota cars in addition to taking advantage of the special deals to be available exclusively at this event along with interacting with officials from banks and financial institutions.

This special open family event will be dedicated to motor enthusiasts in Kuwait featuring a 360 entertaining package such as:

Experiencing the vehicle dynamics on track Open track for Supra owners Hybrid Models vs Conventional models Obstacle course for SUV lineup Open drift circuit for Supra and 86 owners

Passenger drift experience with Mohammad Al-Abdulrazzaq Experiencing the go-kart circuit Fun activities including Face Painting, Bouncy Castle, Jigsaw Puzzles and 50cc Quad bike for kids / Adults can enjoy the Gran Turismo

simulators, Tire Jumping, Football Shooting Target and Football Snooker

Full range of Toyota models displayed

Exclusive deals and trade-in offer

Most importantly the unique offers exclusive to visitors from the banks who are partnering at the event.

The entertaining event will also feature DJ and music, food truck and several spot raffles to give away attractive prizes.

ALSAYER and Toyota are pushing boundaries to provide a unique experience. The event spread across 2 days will enable Toyota lovers to utilize various track facilities at the Kuwait Motor Town upon prior registration for the respective session through their official website http:// event.toyota.com.kw/en, where the detailed event schedule is also listed for the convenience of visitors.

To successfully host this exceptional family event Mohamed Naser Al Sayer & Sons is partnering with Kuwait Motor Town which is a world-class venue, marking itself as the most prominent motor town worldwide, located on Route 40 approximately 45 minutes’ drive south from Kuwait City.