Kuwait, Saudi, Oman drive broader GCC index into the green

KUWAIT: After three consecutive months of decline, the broader GCC gauge (MSCI GCC Index) saw gains during November-19 primarily on the back of Kuwait, Saudi and Oman that showed low single digit gains. These gains were partially offset by declines in the UAE and Qatari benchmarks. The 3.7% gains in Kuwait’s All Share Index once again pushed the Kuwaiti market to the top spot in terms of YTD-19 gains at 16.7% followed by Bahrain at 14.2%.

On the other hand, the decline in UAE and Qatar came mainly on the back of the rebalancing in MSCI’s EM index that led to an outflow of passive funds during the last week. In terms of sector performance, gains were mainly driven by the Materials sector that witnessed a growth of more than 2% during the month. The Banking and the Energy sectors closely followed with monthly gains of around 1.7%.

Gains in the Materials sector was led by regional cement stocks in addition to SABIC that gained 3.8% during the month while, Saudi Arabian Mining, the second biggest stock in the sector, gained 1.3%. In the Banking sector, Saudi and Kuwaiti banks featured as top performers during the month with double to high single digit gains during the month.

Meanwhile, Bahri and Naqilat were prominent largecap gainers in the Energy sector. On the decliners side, Real Estate and Financial stocks underperformed with declines of around 2.5% for the two sectors. Trading activity in the GCC continued to decline for the third consecutive month and reached a nine month low of USD 20.3 billion in Nov-19 primarily led by a 10% decline in value traded in Saudi Arabia.

Globally, equity markets were largely positive during November-19 following the trends seen during the previous month. The MSCI World Index gained more than 3% during the month supported by positive performance recorded in almost all major stocks markets. In the commodities space, oil prices gained during the month by more than 6% taking cues from the US-China trade talks. After recording marginal gains during October-19, Kuwaiti benchmarks recorded the best monthly return in the GCC during November-19. Kuwait was also one of the best performing market globally during the month closely following the US stock market. Gains during the month came solely on the back of large-cap stocks as seen from the disparity between returns for the Premier market index and the Main Market index.

The Premier Market benchmark gained 5% during the month pushing its YTD-19 gains to 23.8%, one of the highest globally. On the other hand, the Main Market index remained almost flat with a marginal gain of 0.2% resulting in a YTD-19 gain of 0.6%. The net impact on the All Share Index came in at 3.7% during November-19 with YTD-19 gains now recorded at 16.7%, the highest in the GCC, overtaking last month’s top performer Bahrain.

Monthly gains came primarily on the back of largecap sectors like Banks, Real Estate and Telecoms. The Banking sector index topped the sector performance chart with a gain of 5.1% led by gains recorded by 9 out of 10 Kuwaiti banks during the month. Warba Bank recorded the biggest monthly gain of 8.2% followed by NBK and KFH at 7.4% and 6.6%, respectively, while ABK was the only decliner with a fall of 7.6%.

Decline in the shares of ABK came after the bank recorded a net loss of KD 7.1 Million during Q3-19 led by higher provisions that more than doubled q-o-q to KD 32.0 Million. The Bank also announced the sale of its entire stake of 8.05% in KFIC. Meanwhile, gains in the Real Estate sector came after large-cap stocks in the sector recorded gains including Mabanee (+9.5%), Salhia Real Estate (+4.4%) and Al Tijaria (+2.5%). For the Telecom sector, gains came on the back of 4.3% and 3.9% gain in shares of Ooredoo and Zain, respectively, while shares of Viva declined by 2.7%.

Trading activity saw marginal gains during the month with gains in both monthly volume and value traded. Monthly value traded increased by 2% to reach KD 514.1 million in November-19 as compared to KD 503.8 million during the previous month. Monthly volume also gained at almost the same pace of 1.9% to reach 3.0 billion shares as compared to 2.9 billion shares during October-19.

NBK topped the monthly value traded chart with KD 103.4 Million worth of trades followed by last month’s top performer KFH at KWD 68.5 billion. On the monthly volume chart, Arzan Financial Group topped with 247.5 Million shares changing hands during the month followed by A’ayan Leasing and Abyaar Real Estate at 209 Million shares and 192.5 million shares, respectively. In terms of monthly performance, Arabi Holding Group topped with a return of 52.2% followed by Educational Holding Group and Manazel Holding with gains of 34.4% and 33.1%, respectively. On the decliners side, Al Masaken Intl. Real Estate topped with a decline of 33.8% followed by Kuwait Syrian Holding and Tahsillat with declines of 26.4% and 22.9%, respectively.

Monthly value traded

Saudi Arabia was the third-best performing market in the GCC during November-19 with a monthly gain of 1.5%. The index witnessed a five day winning streak during the third week of the month in which the benchmark breached the 8,000 mark to reach 8062.6 points but declines after the MSCI rebalancing pulled down the index to close the month at 7,859.06 points. Gains during the month also pushed YTD-19 returns in the positive territory, albeit marginally, at 0.4%.

Sector performance during the month was mixed with the Food & Staples Retailing index topping with a gain of 8.0% followed by Banks and Capital Goods indices with gains of 4.0% and 3.7%, respectively. On the other hand, the Software & Services sector was the top decliner during the month with the sole stock in the index declining by 12.6%. The Diversified Financials and Real Estate sectors also declined during the month by 4.8% and 3.4%, respectively.

Trading activity on the exchange declined for the third consecutive month in November-19. Total value traded reached a 9-month low level of SAR 55.3 billion, a decline of 10.3% as compared to previous month’s SAR 61.7 billion. Volume of shares traded also declined but at a slightly smaller pace of 9.4% to reach 2.2 billion shares in November-19 as compared to last month’s 2.46 billion. The weekly trading data for the first three weeks of the month showed that local Saudi retail investors have been net sellers this month while foreign institutional investors were net buyers.

In terms of individual companies, Alinma Bank topped the monthly volume traded chart with 210 Million shares traded during the month followed by Al Rajhi Bank and SABB with 127.2 Million shares and 108.8 Million shares, respectively. On the monthly value traded chart, Al Rajhi Bank topped with SAR 7.9 billion worth of shares changing hands during the month followed by Alinma Bank and SABIC at SAR 4.6 billion and SAR 4.0 billion, respectively.

The monthly stock performance chart was topped by Al Kathiri Holding, which moved from the Nomu Parallel Market into the main market during the month, with a gain of 62.3%. Gains came after the company reported more than 30% increase in Q3-19 revenues and 20% increase in net profits. Saudi Ceramic was next on the gainers list with 28.2% gain followed by City Cement and Raydan Food with monthly gains of 15.3% and 12.0%, respectively.

Shares of Saudi Ceramic gained after the company reported higher revenues during Q3-19, and the bottomline came in at a positive SAR 34.5 Million as compared to loss of SAR 38.5 Million during Q3-18. On the decliners side, Al Ahlia Insurance topped with a fall of 19.3% after the company recorded a loss of SAR 19 Million during Q3-19 as compared to a profit of SAR 4.5 million during Q3-18. Salama Coop Insurance was next on the list with a decline of 17.8% after the company reported a loss during Q3-19 followed by Saudi Company for Hardware and Al Moammar Information Systems with declines of 13.6% abd 12.6%, respectively, after both the companies reported a y-o-y decline in net profits during Q3-19.

The Q3-19 earnings of Saudi-listed companies showed a 25.4% y-o-y decline during the quarter. Total quarterly profits reached USD 6.4 billion during Q3-19 as compared to USD 8.6 billion during Q3-18. The decline came after a 73.4% decline in profits for the Materials sector and 45.3% decline for the Utilities sector. These declines were partially offset by 3.7% y-o-y rise in profits for the Banking sector and 10.6% increase in profits for the Telecom sector.