Global Investment House- Kuwait- Kuwait Stock Exchange Performance – February 2007 – Kuwait market ended the month of February on a positive note as the “Global” General Index reported a monthly increase of 2.68% and ended the month of Feb-07 at 296.66 points. The index reported overall YTD gain of 2.02% at the end of Feb-2007. The market capitalization reached KD43.28bn at the end of Feb-07, registering a gain of 3.59% as compared to the previous month. Kuwait Stock Exchange Price Index closed at 9,752.6 points, reporting a slender monthly gain of 0.4% in Feb-07.
Despite the reduced number of trading days in the month of February due to the holidays, the volume of shares traded on the bourse witnessed a monthly increase of 14.71%, aggregating to 2.28bn shares in Feb-07. Value of shares traded also increased by 11.14%, amounting to KD1.29bn. Service sector accounted for 30.0% of the total value of shares traded on the exchange during the month. Kuwait Projects Company (KIPCO) stock was in limelight, and was among the leaders in terms of trading activity as well as price gainers. KIPCO’s 202.56mn changed hands at a value of KD139.74mn during the month. The stock price of KIPCO increased by 18.8% to end the month at KD0.760.
Global Services Sector index hogged the limelight during the month, reporting a monthly increase of 11.64% and a YTD gain of 14.42% by the end of the month. Index heavy weight, Mobile Telecommunication Company (MTC) reported earnings growth of 67.83% to reach KD305.3mn in 2006 as compared to KD181.9mn reported in the previous year. MTC also announced during the month that the company has plans to invest US$10.5bn in Africa though its subsidiary “Celtel”. As a result of these positive news flow, the stock price of MTC appreciated by 20.1% to end the month at KD4.180.
The second telecom company, National Mobile Telecommunication Company (Wataniya) reported an earnings growth of 38.48%, as its net profit reached KD73.2mn in 2006 as compared to KD52.83mn in 2005. Wataniya also signed a US$1bn syndicated credit facility from leading European, Asian and Kuwaiti banks. On back of these positive developments, the stock price of Wataniya appreciated by 7.6% to end the month at KD3.100.
The healthy earnings reported by the listed banks could not elevate the banking sector index during the month of Feb-07. The banking sector represented through the “Global” Banking Index” reported a marginal decline of 0.06%. Cumulative net earnings of the banking sector reported yearly growth of 25.93% to reach KD801.79mn in 2006. All the listed banks reported double digit earnings growth during the same period, except for Kuwait Real Estate Bank, which reported a loss of 2.12%. As a result, the stock price of KREB depreciated by 10.6% to end the month at KD0.590. Kuwaiti banks have benefited from strong economic growth witnessed during the year 2006 on the back of high oil prices and production. We believe that the banking sector in Kuwait is expected to continue the healthy performance in the year 2007.
Market breadth during the month tilted slightly in favor of the decliners, as 79 stocks reported monthly decline as compared to 74 monthly gainers, whereas the prices of 28 stocks remained unchanged. The major gainers during the month were Combined Group Contracting Co (+25.8%), Metal & Recycling Company (+19.2%) and Boubyan Bank (+18.2%). The biggest losers during the month were Warba Insurance Company (-18.8%), Al-Noor Financial Investment Company (-18.0%) and Kuwait Lebanese Real Estate Development Co (-15.9%). In our opinion both institutional as well as retail investors will churn their portfolio in the coming months keeping in mind the more corporate earnings news and in anticipation of hefty distributions. However, we don’t expect sharp rally from the market, but some select stocks will attract investors attention.
