Gulf bourses kick off 2013 with record high performance KSE Price Index ends 2012 as third best gainer

KUWAIT CITY, Feb 10: Improved global financial market conditions, intensified central bank intervention through large-scale asset-purchase programs, prolonged global liquidity injection and renewed pursuit of high-yielding assets helped ease concerns of another global economic slowdown. Increasing stabilization of financial market conditions in Europe together with less fiscal-related tension in US markets and on-going signs of economic recovery in China have contributed to a moderation in risk aversion globally. As a result, investors’ risk appetite in the GCC replenished on hopes that a recovery in economies that have been experiencing a slowdown after the global financial crisis may show signs of improvement in the near future. All combined, this pushed GCC equity markets to record highs in what seems to be a strong and positive beginning for 2013.

Catalyst
GCC Bourses began 2013 on the upside with all markets recording healthy gains during January 2013. Dubai Financial Market was the best performer for the month adding 16.34 percent following a solid year 2012 which witnessed the DFM General Index leading the GCC Bourses benchmarks with an annual return of 20 percent. Recovery in the property market, acceleration in business activities driven by tourism and increasing trade volume, along with the benefits of the Arab spring that triggered a flow of capital to Dubai are the major catalyst that are driving DFM. Abu Dhabi Securities Exchange is benefiting from the government’s massive capital spending plan to develop the emirate by investing in infrastructure and real estate projects along with robust oil prices and healthy corporate profits; ADX General Index followed with a monthly gain of 9.54 percent compared to 9.52 percent gain in full year 2012.

Qatar Exchange, TADAWUL and Kuwait Stock Exchange also recorded corresponding healthy gains of 4.38 percent, 3.56 percent and 3.48 percent, respectively during January-13 driven by the positive market sentiment, improvement in business environment, healthy corporate earnings and governments’ backup of key economic sectors and capital spending. During January, the combined market capitalization of the 7 GCC bourses added $29.7 bn to record $792.5 bn driven by the gains witnessed by TADAWUL and the UAE markets which mounted to $10.7 bn and $11.2 bn, respectively.

Abu Dhabi and Dubai witnessed a surge in market performance during the month on clear signs that both economies are witnessing strong recovery fuelled by the government attempting to diversify the economy through the record spending plans. Although TADAWUL remains the main driver for market growth in the GCC region, Abu Dhabi Securities Exchange was able to add $5.8 bn to its market cap while Dubai Financial Market gained $5.2 bn. Saudi Arabia’s gross domestic product (GDP) growth slowed to 6.8 percent in 2012 compared with the 8.5 percent growth in 2011, data from the Central Department of Statistics and Information (CDSI) showed.  The statistics department has revised the 2011 GDP figure upward to 8.5 percent from the earlier 7.1 percent.

The world’s largest crude exporter saw growth in the oil sector slow to 5.5 percent in 2012 compared to 10.4 percent in 2011 when the Kingdom ramped up production to make up for disruptions in Libyan output. Elsewhere, Oman’s gross domestic product, adjusted for inflation, grew an estimated 8.3 percent in 2012, faster than the government’s target of 7 percent on the back of heavy government spending which boosted growth, according to the Ministry of Finance; while Qatar’s GDP grew by around 3.9 percent in Q3-12, helped by a surge in manufacturing and other non-hydrocarbon sectors.
Kuwait’s budget surplus for the first 8 months (April 2012 — November 2012) of fiscal year 2012/2013 reached KD 14.7 billion, exceeding the KD 11.6 bn surplus recorded during the same period of FY 2011/2012. Revenue stood at KD 21.6 bn, far exceeding the budgeted amount of KD 9.3 bn. Oil revenue continues to make up almost all of the government’s income, accounting for nearly 95 percent of total revenue.

In Saudi Arabia, although the Saudi economy slowed down in 2012 compared to 2011 and FY-12 earnings were not up to expectations, the Saudi Market was able to follow its GCC peers and end the month of January on a positive note on speculations that the recent budget announced will help support the economy continue to post growth. As a result, the TASI was up 3.56 percent in January to breach the psychological 7,000 mark and end at 7,043.55 points. By the end of the month, market breadth skewed heavily towards the gainers with an advancer-to-decliner ratio of 101-to-49 and 7 stocks unchanged.
Accordingly, TADAWUL market capitalization rose 2.85 percent adding SAR 40 bn ($10.7 bn) to reach SAR 1.44 trillion ($383.9 bn) as compared to SAR 1. 4 trillion ($373.3 bn) recorded at the end of December-12, as all sectors in the market increased with the exception of Insurance and multi-investment sectors.

Market heavyweight Petrochemical Industries added 3.83 percent to its market cap to reach SAR 456.8 bn ($121.8 bn) while the Banks and Financial sector was up 4.35 percent to SAR 320.8 bn ($85.5 bn) and the Telecommunications & IT sector gained 0.46 percent to SAR 153.5 bn ($40.9 bn). Trading indicators rose during the month with volume traded increasing 6 percent to 4.7 bn shares distributed over 2.8 mn transactions while value traded gained 3.4 percent to SAR 128.1 bn from SAR 124 bn in December-12.

While in Kuwait, despite the lack of economic fundamentals from the country and the lower than expected FY-12 earnings announced so far, the Kuwaiti bourse was able to reverse last month’s fall and begin the year to the upside, trailing its GCC peers. Although trading was focused on small cap stocks as investors were targeting quick gains, the KSE Price Index ended as the third best performing market following Dubai Financial Market and Abu Dhabi Securities Exchange to end the month gaining 5.24 percent. On the other hand, the KSE Weighted Index rose 3.48 percent while the KAMCO TRW Index advanced 2.42 percent. During the month of January 2013, the market capitalization of Kuwait Stock Exchange added 3.12 percent or around KD 909 mn ($3.2 bn) to record KD 30 billion ($106.1 bn) at the end of the month, supported by heavyweight Banking and Telecom sectors adding KD 257.4 mn ($910.7 mn) and KD 249.5 mn ($882.8 mn), respectively.

Compared to December-12, trading indicators ended the month mixed with volume increasing 15 percent to 8.24 bn shares from 7.16 bn shares in December-12; while value traded decreased 11 percent to KD 651 mn down from KD 730 mn in December-12. As for Abu Dhabi, the Abu Dhabi Securities Exchange, as measured by ADX General Index, jumped 9.54 percent in January to end as the second best performing market following neighbour Dubai, on the back of a AED 330 billion spending drive announced by the Abu Dhabi government which added to investor confidence on speculation that the Emirate will witness a prosperous economic recovery. Accordingly, market breadth was heavily skewed towards the gainers with advancers-to-decliners ratio of 42-to-12 while 9 companies remained unchanged from last month. Liquidity indicator surged during the month as volume jumped a whopping 151 percent to 3.3 bn shares while value rose 143 percent AED 4.5 bn from AED 1.8 bn in December-11.

Total market capitalization added 7.36 percent to AED 311.6 bn ($85 bn) in January supported by the 9.66 percent increase in heavyweight banking sector to reach AED 146.5 bn and the telecommunication sector adding 4.65 percent to its value to stand at AED 112.2 bn in January-13. In Dubai, Expectations of an economic recovery in the Emirate, coupled with strong earnings in FY-12 helped push the index higher to end as the best performing market in the GCC with a whopping 16.34 percent gain during January to end as the best performing market among its GCC peers. Boosted investor sentiment resulted in a buying spree taking the DFM General Index to a fresh 34 month high as foreign investors buy into the Emirate’s blue-chips.

In line with the positive performance during the month, the bourse’s market cap added 11 percent to its value to reach AED 193.8 bn ($52.8 bn) supported by the banking and real estate & construction sectors gaining 15.13 percent and 27.19 percent to AED 52.4 bn ($14.3 bn) and AED 40.5 bn ($11 bn), respectively.  Liquidity surged during the month of January, with volume and value jumping 211 percent and 213 percent to 7.6 bn shares and AED 8.7 bn, respectively, over 93,969 transactions. In Qatar, the Qatar Exchange snapped a two month losing streak and began 2013 on a positive note to end as the fourth best performing market among its peers in the GCC region. Strong FY-12 corporate earnings and positive economic fundamentals helped boost investor confidence to nearly wipe out 2012 losses.

As a result, the QE 20 index added 4.38 percent to end the month of January at 8,724.77 points and recover the majority of the 4.79 percent slump witnessed in 2012. Market capitalization for the month was up by 3.37 percent to QAR 475.4 billion as compared to QAR 459.9 billion in December-12 supported by the jump in the heavyweight Banking sector which gained 2.3 percent to QAR 183.7 billion followed by the industrial sector adding 7.14 percent to its market cap to reach QAR 134 billion in January.
Liquidity measures showed improvement as trading priced up during the month with volume increasing 49 percent to 90.7 mn shares, while value traded was up by 56 percent to QAR 4.6 bn spread over 64,943 transactions.

In Bahrain, The Bahrain All Share Index continued its upward trend for the second consecutive month and started 2013 on a positive note to post a gain of 1.83 percent in January and closed the month at 1,085.14 points. Gains for the month stemmed from the heavyweight Commercial Banks and Service sectors, which saw returns of 6.76 percent and 4.65 percent, respectively, while the Insurance sector also gained 1.45 percent. Whereas market heavyweight Investment sector which represents 29 percent of the total market cap shed 4.51 percent during the month. Trading indicators were also up significantly with volume, value and trades increasing 337.03 percent, 198.07 percent and 92.39 percent, respectively, to record 149.91 mn shares with a value of BHD 15.47 mn exchanging hands through 1,618 trades. In the GCC, DFM topped the list as the best performer with monthly gains of 16.34 percent followed by ADX with a gain of 9.37 percent, respectively.

Finally in Oman, strong economic growth data coupled with robust growth in FY-12 earnings support the Omani Bourse during the first trading month of 2013 as it increased for the second consecutive month to follow its GCC peers and end on a positive note. The MSM 30 index ended the month advancing 0.68 percent to 5,799.79 yet was at the bottom of the list within the region as other markets outperformed Oman. Accordingly, market breadth skewed towards the gainers with an advancer-to-decliner ratio of 32-to-21 while 7 stocks remained unchanged. Nevertheless, trading indicators fell with volume decreasing 6 percent during the month to 416.5 mn shares compared to 442.5 mn in Dec-12, while value traded was down by 1 percent to OMR 103.8 mn versus OMR 104.9 mn in the previous month.

Market heavyweight banking & investment sector gained 2.08 percent to reach OMR 3.3 bn, supported by the 6.77 percent and 3.92 percent rise in sector heavyweights Bank Muscat and Bank Dhofar, respectively; while the services & insurance sector decreased 0.67 percent to OMR 2.48 bn from OMR 5 bn and the industrial sector rose 2.85 percent to OMR 1.29 bn from OMR 1.25 bn. Established in 1998 with the mission to significantly alter the local and regional investment landscape, KAMCO is a premier investment company based in Kuwait. A subsidiary of United Gulf Bank (UGB) — the investment banking subsidiary of Kuwait Projects (Holding) Company (KIPCO) — KAMCO was listed on the Kuwait Stock Exchange (KSE) in 2003.

After many years of conducting business in Kuwait’s dynamic investment industry, KAMCO has successfully established a robust reputation for solidity, characterized by its prudent, conservative investment philosophy which has consistently commanded the goodwill of a wide patron-base.
KAMCO’s main activities are Investments and Asset Management.  Its Investments Division specializes in different sorts of investments, financial and advisory services, and investment research which tracks the latest directions and trends across regional and local economies as well as equity markets.

With regards to the Asset Management Division, its activities concentrate on providing customized portfolio management, access to IPOs, and local and international fund management in addition to maximizing returns, mitigating risks, and maintaining capital appreciation for individual and institutional clients. All of the above operate within the spirit of transparency and exclusivity with the client’s best interests at heart. The company will further aggressively build upon its core competencies to offer MENA-wide investment management consultancy and services, backed by its proven track-record in stringent risk mitigation, investment product innovation, and a cautious investment approach towards local, regional and international capital markets.

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