Positive news flows from the macro perspective, high oil prices and some more contracts signed by the Kuwaiti companies has led to an improved market sentiment which in turn helped the Kuwait stock exchange gain confidence of the investors. Six months in a row the Kuwait market continued its upward journey and in November the benchmark “Global” General index increased by 7.48% to close at 334.13 points. During the last six months, the Global General index has registered a handsome gain of 43.72%. Overall, the index has reported YTD gain of 74.85% at the end of November-2005. The market cap. of the stock exchange reached KD43.01bn, a growth of 9.89% compared to the previous month. As expected, Kuwait Stock Exchange price index is edging closer to the 12,000 point mark and closed for the month at 11,869.1 points, recording an increase of 3.47% over the previous month.
The volume of shares traded saw a marginal decline of 4.75% amounting to 5.67bn shares as compared to the previous month. On the other hand, the value of shares traded followed the upbeat trend and increased by 6.36% aggregating to KD3.39bn over the last month. Kuwait Projects Company Holding(KIPCO) was the star performer in terms of both volume and value of shares traded during the month. KIPCO along with other institutional investors such as Hamad Al-Wazzan Group, Al-Hassawi Group and Fouad Al-Ghanem Group will form a new airline company under the name “National Airline Company” with a capital of KD50mn (US$170.35mn), where KD35mn or 70% of the capital will tapped through public subscription in December ‘05. In addition, Kipco also signed a memorandum of understanding with Abdali Investment & Development Company to become a strategic partner in the urban regeneration project in Jordan, where Kipco’s total investment will be amounting to US$400mn. As a result of these positive developments, the stock appreciated by 21.8% to end the month at 475fils.
On the oil front, the 138th meeting of OPEC will be held in Kuwait during the month of December. Currently, the oil prices are hovering around the US$50 a barrel after the record price of US$70 a barrel on August 30th, which can be attributed to the fact that OPEC is showing no indications to reduce the current production level and USA have not been so cold in winters this time. Furthermore, it is also believed that in the next meeting of OPEC, there will be no reduction in the production levels unless the prices of oil drops dramatically within the next few weeks.
Among the sectoral indices, all the index sectors with the exception of the real estate and food sector saw an upward movement during the month. Strong nine months profit growth coupled with positive news flow helped boost the banking sector to the forefront of gainers during the month. The “Global” Banking Sector Index climbed 13.82% to end the month at 340.95 points. The profits of listed companies under the banking sector during the first nine months improved to KD474.76mn as compared to KD316.91mn recorded for the corresponding period last year, reporting an handsome increase of 49.81%. As a result, all the eight listed companies stock appreciated during the month, and 5 of these banking stocks appreciated in double digits.
Industrial sector index was among the top performers with a substantial increase of 11.62% recorded for the month. The profits of listed companies under the industrial sector more than doubled during the first nine months, reporting an increase of 119.52% compared to corresponding period last year. National Industries Group Holding (NIG) reported a profit of KD94.31mn during the first nine months, recording a whopping increase of 235.97%. As a result, the stock appreciated by 29.5% and crossed the KD2 mark for the first time during the year.
Out of the eight sectors under the Kuwaiti market, only the investment sector has a YTD gain of more than 100% at the end of November ’05. The profits of listed company under the investment sector during the first nine months were more than doubled compared to the corresponding period last year, reporting an increase of 122.63%. International Investment Group (IIG), so far has an exceptional year both in terms of earnings as well as price appreciation. IIG’s nine months profit improved to KD15.77mn as compared to KD1.02mn recorded for the corresponding period last year, registering a whopping gain of about 1441.19%. The stock price of IIG in 2005 appreciated by 423.5% to end the month at 890fils as compared to 170fils at the end of December 2004.
The market breadth was marginally positively with 76 stocks advancing and 65 stocks declining, while 12 stocks remained unchanged. Out of the 76 advancers during the month, 36 stocks have witnessed double digit growth indicating strong investors interest following the nine months whopping results. The major advancers during the month included Aayan Real Estate Company (+54.2%), Metal & Recycling Company (+45.7%), Kuwait Slaughterhouse Company (+33.9) and International Leasing and Investment Company (+29.8%). On the flip side, the major decliners included International Investment Projects (-21.3%), Kuwait Building Materials Manufacturing Company (-14.5%), Gulf Rocks Company (-13.9%) and International Industrial Projects Group (-12.9%). Raad Stores Company stock price readjusted as the company increased its outstanding shares from 50mn to 1bn, while Egypt Kuwait Holding Company declared a 4 for 1 stock split, which will increase the outstanding shares to 529.2mn shares from 132.3mn shares due to which the stock price witnessed readjustment during the month.
The market added two new companies during the month, further improving the depth of the market. Al-Safat Investment Company and Burgan Holding Group Company was listed under the investment sector, which increased the total number of listed companies to 153. So far, 28 new companies have been added to the market in 2005. The business and consumer confidence in the economy being high due to the huge surplus generated on back of high oil prices, we believe that it should boost investor sentiments and facilitate the market to climb further up towards the end the year 2005, what has already been a fabulous year so far.
