Global Investment House – Kuwait - Kuwait Stock Exchange Market Performance For the Month of February 2009- Though we witnessed positive movements in Kuwait market during the first few days of Februray-2009 with the government confirming the move to set up a fund aimed at providing liquidity for local companies, sentiments subsequently turned negative and the market continued to decline for the rest of month. The market registered a decline of 8.8% as “Global” General Index ended the month at 164.22 points. This followed a decline of 12.8% in January-2009. The market capitalization reached KD26.43bn at the end of the month, registering a decline of 8.7% as compared to the previous month.
The overall trading activity increased during February-2009 compared to the previous month. Volume of shares traded on the bourse witnessed a monthly gain of 58.8%, aggregating to 5.55bn shares in the month. Value of shares traded on the bourse also witnessed a monthly increase of 20.0%, aggregating to KD1.08bn in the month. Kuwait Finance House was the top value leader for the month with 114.9mn shares changing hands at a value KD131.8mn. Gulf Finance House was the top volume leader for the month with 395.7mn shares changing hands at a value KD99.3mn.
The major gainers during the month were The Investment Dar (91.2%), International Leasing & Investment Co (84.8%), Education Holding Group (59.4%), whereas major losers during the month were Al Safat International Holding Company (-51.8%), National Investments Company (-50.9%), International Resorts Co (-41.5%).
Most of the sectoral indices ended the month in red with the exception of Food Index and Industrial Index which gained 7.8% and 1.2% respectively during the month. During the month of February-2009, Global Banking Index was down by 8.4%. Among Banking sector components, Boubyan Bank lost 27.4% during February-2009 to reach KD0.305. As per reports, Boubyan Bank will be contributing to an increase in the capital of Al- Abraj Holding Company with an effective stake, and that the contribution agreement could be signed soon. The sources added that the bank’s move would further strengthen the company, and that it would reserve two seats on the Company’s board.
Among other components in the banking sector, Kuwait Finance House (KFH) lost 16.1% during February-2009 to reach KD0.990. Kuwait Finance House (Malaysia) Bhd, a wholly-owned arm of Kuwait Finance House said that it is considering regional acquisitions and business alliances to boost its size as it eyes huge untapped markets such as China and Japan. The Asian subsidiary of Kuwait’s top Islamic Bank said that it may buy into regional Islamic lenders in its quest to fill a gap in the industry for large banks, Managing Director K. Salman Younis said, adding that the bank had not yet identified any specific targets.
Five Kuwaiti banks, including top Islamic lender KFH, face possible downgrades because of exposure to debts of troubled investment firms, ratings agency Standard & Poor's said. S&P also cut its outlook for National Bank of Kuwait (NBK) to negative from stable, the ratings agency said in a statement, citing a worsening economic environment in which the Gulf Arab state's biggest bank by assets operated. S&P said it put the "A-" long-term counterparty credit rating on KFH and Commercial Bank of Kuwait (CoBK), which posted losses in the fourth quarter, under credit-watch negative. This means it may downgrade those lenders. It confirmed the "A-2" short-term counterparty credit rating for both lenders and also NBK's "A+/A-1" long- and short-term credit ratings. The agency also put the "BBB+/A-2" long- and short-term ratings on Al-Ahli Bank of Kuwait (ABK) and Burgan Bank (BB) under credit-watch negative after having already placed "A-/A-2" rating of Gulf Bank (GB) under the same grade after Kuwait had to rescue it following losses with derivatives. "The various rating actions reflect our expectation that the exposure of these five banks to the distressed local investment companies sector is likely to materially affect their stand-alone credit profile, in the context of an already weakening operating environment," S&P said in a statement. Approving and implementing a government rescue plan "would influence the stand-alone credit profile of these banks", S&P added.
During the month of February-2009, Global Services Index was down by 11.7%. Among Services sector components, Agility declined 6.0% during February-2009 to reach KD0.630. Agility Defense & Government Services (DGS) and Tristar Transport announced an agreement to buy Shell Guam Inc.'s Agat Fuel Facilities. The bulk-fuel storage and distribution facilities will be operated by Tristar Terminals Guam, a joint venture owned by Agility DGS and Tristar Transport. The purchase includes 25 bulk-fuel storage tanks with a combined capacity of roughly 4mn barrels; five miles of pipeline; and receipt-and-issue facilities.
Among other components in the services sector, Zain lost 15.4% during February-2009 to reach KD0.660. Zain announced that it plans to bring mobile banking to over 100mn people in East Africa with the launch of its new service, Zap. Providing the most comprehensive and accessible package of mobile banking features currently available on the African continent, Zap will be initially available in Kenya and Tanzania prior to launch in Uganda. According to reports, Zain and Qatar Telecommunications Company (Qtel) are in talks with their lenders to refinance existing debt, banking sources close to the deal said. Difficult market conditions mean that if the loans are to happen then they are likely to be mainly dependent on support from existing banks, which means predominantly club-type financings, the banker added. Zain’s previous loan was a US$1.2bn Islamic financing that signed in April 2008.
Kuwait market continues to be affected by local, regional as well as international factors. Results of some of Kuwaiti companies for the period 4Q-2008 have been announced. However the not-so-encouraging performances of the Kuwaiti corporates have done little to boost up investor’s confidence. The uncertainty over the draft law aimed at boosting financial stability has also impacted market performance negatively. The US$5bn rescue plan will be presented on March 3 for parliamentary approval. If the plan is approved by the parliament, we expect it to provide much-needed support to the economy as well as market.
