After recording a yearly growth of 29.9% in 2007, Kuwait started 2008 on a strong note. “Global” General Index reported a monthly gain of 8.4% as it ended the month of January 2008 at 409.51 points. Though the market maintained its upward trend throughout the month, there was a brief period of volatility during the third week of month due to developments in the global financial markets. However the rate cut by CBK, which followed Fed’s move, provided the impetus to the market. The market capitalization reached KD61.34bn at the end of the month, registering a growth of 6.8% as compared to the previous month. Kuwait Stock Exchange (KSE) Price Index closed at 13,499.7 points, reporting a monthly gain of 7.5% in January 2008. There was another round of rate cut by CBK on the last day of month following the Fed’s move.
The major development for the month was that Kuwait’s Cabinet approved the country’s budget for the fiscal year 2008/09 (Apr’08 to Mar’09) which still needs to be sanctioned by Kuwait’s Parliament. The revenues estimated for 2007/08 is KD12.68bn, around 52.4% up from KD8.32bn estimated in the 2007/08 budget. The oil revenues for 2008/09 is estimated at KD11.65bn, up 56.4% from KD7.45bn estimated for 2007/08. Similarly the total expenditures for 2008/09 is estimated at KD17.80bn, up 57.5% from KD11.30bn estimated in the 2007/08 budget. The higher expenditure projected for 2008/09 is due to the cabinet decree targeting the settlement of the KD5.47bn deficit to be paid in installments to the Public Institute For Social Security (PIFSS). On account of his significant increase in the expenditure, Kuwait’s Cabinet has estimated a deficit of KD5.12bn for 2008/09. And considering the fact that around KD1.27bn of national revenue will be contributed to Reserve Fund for Future Generations (RFFG), the overall deficit for 2008/09 is estimated at KD6.39bn.
The overall trading activity improved significantly during the first month of the year. Volume of shares traded on the bourse witnessed a monthly gain of 127%, aggregating to 8.60bn shares in the month. Simultaneously, value of shares traded on the bourse witnessed a monthly gain of 136%, aggregating to KD4.36bn in the month. Al Safwa Group Company was the top volume leader for the month with 717.2mn shares changing hands at a value KD127.0mn.
Market breadth during the month tilted in favor of advancers with 114 advancers and 52 decliners, whereas the prices of 29 stocks remained unchanged. The biggest gainers during the month were Al-Abraj Holding Company (55.2%), Al-Enma'a Real Estate Company (51.5%) and Gulf Insurance Company (45.9%). The biggest decliners during the month were Nibras Holding Company (-41.7%), Palms Agro Production Company (-36.3%) and Salbookh Trading Company (-29.3%). For the month of January-2008, maximum growth was seen in Global Industrial Index (11.6%), which was followed by Global Investment Index (10.1%).
Global Banking Index was up 8.9% during the month. Among its components, Commercial Bank of Kuwait (CoBK) gained 9.3% during January-2008 to reach KD1.640. According to reports, CoBK plans to expand in the Middle East and North Africa. In the same sector, NBK and KFH have already announced their full year results for 2007. The net profit of NBK was KD273.6mn for 2007, up 8% from KD253.2mn recorded in 2006. Similarly the net profit of KFH was KD275.3mn for 2007, up around 70% from KD162.0mn recorded in 2006. Share prices of NBK and KFH were up 8.7% and 12.5% respectively during January-2008.
Among the other heavyweight stocks, Zain was up 12% during the month to reach KD4.280. Zain has already announced its full year results for 2007. For the year 2007, Zain has recorded a net profit of KD320.45mn, which is up 8.6% from KD294.98mn recorded in 2006.
During the month, Jazeera Airways Company was listed in the Regular Market. Jazeera Airways Company was granted the approval from the Kuwait Stock Exchange (KSE) to get listed at the exchange on January 14, 2008 under the Services Sector with a paid-up capital of KD20mn. The company achieved a net profit of KD1.03mn for the first nine months ending in September 2007 with an EPS of 10fils compared to KD2.65mn and an EPS of 27fils recorded in September 2006. The total number listed companies in Kuwait (Regular Market) stood at 195 at the end of January-2008 due to delisting of two stocks namely Solidere - A and Solidere-B.
In recent times we have witnessed volatility in global financial market mainly on account of slowdown in US economy and losses by financial giants due to sub-prime crisis. Though the GCC markets including Kuwait have been able to withstand this turmoil due to strong economic fundamentals, it is early to rule out any adverse impact the global developments might have on local markets. The annual results for 2007 have started to come in. The results declared so far have been encouraging and we expect to see good growth for others as well. We believe market will be able to maintain its momentum in coming months on the back of good growth in profitability.
© 2008 Al Bawaba (www.albawaba.com)
