Since Jan-07, the Kuwaiti market has been on northward journey, appreciating by 23.1% by the end of May-2007. Investors seem to have regained the confidence in the market on the back of positive news flow from the macro perspective and healthy first quarter earnings by corporates. “Global” General Index reported a monthly increase of 11.50% and ended the month of May-07 at 365.26 points. The index reported overall YTD gain of 25.62% at the end of the month. The market capitalization reached KD53.62bn at the end of the month, registering a gain of 11.91% as compared to the previous month. Kuwait Stock Exchange (KSE) Price Index closed at 11,489.3 points, reporting a monthly gain of 7.3% in May-07.
Among the major developments on the macro economic front, the recent move from the central bank of Kuwait to revalue its currency peg from US$ to a basket of currencies has allowed the KD to appreciate by 0.37% against the US$. This move from CBK was due to the recent drops in dollar exchange rates against most currencies, which was impacting the national economy. However, Kuwait is still committed to the plan of the GCC monetary union and is working jointly with other member states to meet the deadline for adoption of the new currency.
During the month of May, there were two new listings, namely Vending Network Company and Hayat Communications Company. Both the companies were listed under the service sector, thereby increasing the total number of listed companies to 185. The growth seen in the last four months has encouraged companies to list themselves, as the investors’ confidence seems to be improving. The market will continue to see more listings in the coming month, as five companies were approved listing by the KSE.
The improving investor confidence and interest is substantiated by the increase in the volume of shares traded during the month of May-07. Volume of shares traded on the bourse witnessed a monthly increase of 12.62%, aggregating to 7.22bn shares in the month. It is worth noting that this is the highest volume of shares traded in a month during the last 17 months. Value of shares traded witnessed a decline of 7.79%, amounting to KD4.54bn. However, the drop in value of shares traded was attributed to a one-off transaction (521mn shares traded at around KD3.220 each in one day) in Mobile Telecommunication Company during the month of April-07. Netting off this transaction, then the value of shares traded in May witnessed an increase of about 39.8%.
Global Services Sector index hogged the limelight during the month, reporting a monthly increase of 16.75% and a YTD gain of 54.52% by the end of the month. Index heavy weight, Mobile Telecommunication Company (MTC) reported an earnings growth of 31.90% to reach KD71.36mn in 1Q-07 as compared to KD54.10mn reported in corresponding period of the previous year. A consortium led by MTC was awarded the third mobile telecommunications license in Saudi Arabia in a US$6.12bn bid, which is expected to launch its services in early 2008. MTC holds 50 per cent interest in the consortium which will be reduced to 25 per cent following a mandatory initial public offering (IPO) of the new mobile operator in Saudi Arabia and allocations to two government entities. As a result of these positive news flow, the stock price of MTC appreciated by 27.2% to end the month at KD4.580. It is worth mentioning that the stock price of MTC has appreciated by 43.1% during the last two months.
Market breadth during the month tilted in favor of the advancers, as 108 stocks reported monthly gains as compared to 58 monthly losses, whereas the prices of 19 stocks remained unchanged. It is worth noting that out of 108 companies, 47 companies reported a double digit monthly gain during the month. The major gainers during the month were Gulf Horizon Holding Company (+104.2%), Palms Agro Production Company (+85.5%), and Tamdeen Investment Company (+69.6%). The biggest losers during the month were Kadhma Holding Company (-51.2%), Arabi Group Holding Company (-34.6%), and Gulf Cement Company (-23.7%).
We believe that the bullish sentiments prevailing in the market will continue to boost the trading activities. Also the positive macroeconomic environment will further improve investors confidence in the Kuwaiti market.
Value Leaders (KD)
Mobile Telecommunications Company 852,394,980
Kuwait Finance House 305,665,540
National Industries Group (Holding) 206,587,250
Commercial Bank of Kuwait 186,006,700
National Investments Company 177,577,350
Volume Leaders
Ras Al-Khaimah (White Cement) 458,120,000
Al Safwa Group Company 421,700,000
Boubyan Bank 245,510,000
Al Themar Real Estate Company 218,240,000
Mobile Telecommunications Company 214,679,000
