Kuwait stock market registered a monthly decline of 2.31% in May-2008

Published June 2nd, 2008 - 06:33 GMT

“Global” General Index reported a decline of 2.31% in May-2008 as it ended the month at 390.24 points.  This followed a decline of 0.75% in April-2008. The decline was mainly due to dip in the Global Banking Index which declined by 7.79% during the month. The market capitalization reached KD61.52bn at the end of the month, registering a decline of 0.98% as compared to the previous month.

 

On the macroeconomic front, loans and personal credit facilities of Kuwaiti banks decreased in April-2008 compared to the previous month, while assets and deposits increased as per the Central Bank of Kuwait's (CBK) monthly bulletin. As per the report, loans and personal credit facilities decreased from KD7.21bn in March to KD7.14bn in April as a result of the CBK's new regulations that stipulated that total loan installments should not exceed 40 percent of an employee's salary, and 30 percent of the salary of a retiree. In the meantime, real estate loans and credit facilities increased from KD5.44bn to KD5.72bn. Loans and credit facilities provided by banks to the private sector were KD21.3bn in April, compared to KD21.6bn in March. Assets of local banks continued their increase, reaching about KD37.5bn, increasing by 0.6 percent from March's KD37.2bn. The bulletin said deposits in April equaled KD21.9bn, increasing by 1.15 percent from the previous month, adding that private sector deposits valued KD20bn, while the rest were government deposits.

 

The overall trading activity declined during May-2008 compared to the previous month. Volume of shares traded on the bourse witnessed a monthly decline of 5.5%, aggregating to 8.12bn shares in the month. Similarly, value of shares traded on the bourse witnessed a monthly decline of 8.0%, aggregating to KD3.23bn in the month. Zain was the top value leader for the month with 158.6mn shares changing hands at a value KD273.8mn. National Ranges and Real Estate Company was the top volume leader for the month with 937.0mn shares changing hands at a value KD179.3mn.

 

During the month of May-2008, Global Banking Index was down by 7.79%. Among banking sector components, Burgan Bank declined by 4.8% during May-2008 to reach KD0.990. Recently Burgan Bank announced it plans to acquire Bahrain's United Gulf Bank's regional operations for US$725mn as part of its expansion plans. Burgan Bank will buy United Gulf Bank's holdings in Algeria Gulf Bank, Bank of Baghdad, Jordan Kuwait Bank and Tunis International Bank. Furthermore, The Ministry of Commerce and Industry has given the go-ahead for Burgan Bank to market two long-term investment funds. Among other banking sector components, Commercial Bank of Kuwait declined by 6.6% during May-2008 to reach KD1.420.

 

During the month of May-2008, Global Real Estate Index was up by 7.1%. Among real estate sector components, Grand Real Estate Projects Co gained 1.6% during May-2008 to reach KD0.310. Grand Real Estate Projects Co said its first-quarter net profit rose 16 percent to KD7.36mn from a year earlier on increase in value of real estate investments. Grand which will build a US$10bn Al Noor residential city in Sudan, said first-quarter earnings per share rose to 16.51 fils from 15.45 fils last year. The fair value of real estate investments more than tripled to KD9.11mn in the first quarter from KD2.61mn a year ago.

 

For the month of May-2008, Global Services Index was up by 0.3%. Among components of Services Index, Zain lost 3.5% during the month to reach KD1.640. Mobile Telecommunications Company (Zain) launched its new network in South Sudan, where it aims to spend up to US$150mn expanding in the semiautonomous region. Zain fully acquired Sudan's former state operator Mobitel in 2006 opening the door to expansion in the south.

Among other components of Services Index, Agility gained 19.8% during the month to reach KD1.220. It seems that the investors are buying the stock on the news that it has won a contract worth up to US$2.8bn to supply US forces in Iraq and Kuwait. The one-year contract, which was awarded by the US Defence Logistics Agency and begins on June 3, covers the supply and distribution of food and non-food products to US forces in Iraq and Kuwait.

Though we have witnessed decline in the Kuwait market for the past three consecutive months, we believe the market fundamentals remain intact.  We expect the market to reverse its declining trends in coming months on the back of strong macroeconomic factors and encouraging corporate results.

 

© 2008 Al Bawaba (www.albawaba.com)

You may also like