Kuwait market witnessed strong growth in December 2006
The Kuwait market witnessed buying interest as the benchmark Global General Index (GGI) reported a monthly gain of 3.2% to end the month at 290.77 points. At the end of December-06, the market cap weighted index of GGI reported an overall yearly loss of 9.2%. The market cap. reached KD42.0bn at the end of December-06, registering a gain of 3.6% compared to the previous month. Kuwait Stock Exchange Price Index closed past the psychological 10,000-point mark at the end of the month, closing at 10,067.4 points, reporting a monthly rise of 3.2%.
Shares of two companies – Arkan Al-Kuwait Real Estate Company and Oula Fuel Marketing Company – were listed on the KSE during the month. In 2006, 22 new companies were listed on the KSE, taking the total number of companies listed on the exchange to 179.
The volume of shares traded witnessed a rise of 2.3% compared to that in the previous month, aggregating 3.35bn shares. On the other hand, value of shares traded increased by a sharper 5.7% amounting to KD1.65bn. Investment sector accounted for 25.8% of the total value of shares traded on the exchange during the month. On an annual basis, the KSE witnessed a total volume and value of shares traded of 37.7bn and KD17.3bn, respectively, indicating a reduced level of investor interest with declines of 28.0% and 39.3% respectively.
The “Global” Banking Sector index reported a monthly gain of 3.0% during the month of December. On a YTD basis, the banking sector showed a gain of 11.9% as Kuwaiti banks continued to benefit significantly from the strong economic growth witnessed during the last two years on the back of high oil prices and production. Industry leader NBK closed the month at KD2.180, moving in a narrow range over the month.
The “Global” Services Sector index, increased by 4.6% during the month of December. Index heavy weight, Agility (formerly, PWC) held on to end the month at KD1.680, the same level at which it closed at the end of the previous month. Following the news that the government had cancelled the contracts of the company, the scrip had a see-saw ride over the month, touching a low of KD1.400 early in the month, rallying on to a high of KD1.720 before settling down at KD1.680 at the end of the year.
The market breadth was clearly favoring the advancers as 97 stocks reported monthly gains as compared to only 50 decliners, whereas the prices of 33 stocks remained unchanged. The major gainers during the month were International Industrial Projects Group (+61.6%), Hilal Cement Company (+50.0%) and Al Deera Holding Company (+28.3%). The biggest losers during the month were Oula Fuel Marketing Company (-22.6%), International Financial Advisors (-17.8%) and Heavy Engineering Industries & Shipbuilding Co. (-15.1%). It is worth noting that only seven stocks reported double digits losses during the month of December, compared to 76 stocks in November, underscoring the positive sentiments that prevailed in the market during the month.
The current economic growth if supported by the right policies from the government and the stock exchange authority should support an attractive equity market in Kuwait. As predicted by us last month, the investors seem to have shifted their focus to companies exhibiting predictable growth in earnings and hefty distributions, as most of the companies close their accounts in December and announce distributions in January.