Boursa Kuwait remains bullish in 2017

Boursa Kuwait performance in the first eight months of the current year came second vis-à-vis the most important global stock markets and the entire Gulf markets. Boursa weighted index has gained 13.3 percent since the beginning of the year until the end of August (19.9 percent for the price index). Most gains occurred in the 1st Q of this year. It is noticeable however that the Boursa weighted index gained 4.2 percent in one month. In addition, 55 listed companies achieved higher performance than the markets’, ie rose by more than 4.2 percent.

This means gains were comprehensive; more than one-third of listed companies achieved higher gains than the market’s performance. The capitalization value of these active companies scored KD 15 billion, about 51 percent of all Boursa companies’ value; hence, it is healthy rise which increases the value of investors’ wealth at the Boursa. 14 large companies whose capitalization value is more than KD 100 million each and their total capitalization value is about KD 13.83 billion, or by 91.6 percent of the active companies’ value, achieved the best performance. Their contribution to the value of all listed companies is about 46.7 percent and their liquidity formed around 57.3 percent of Boursa Kuwait’s liquidity in August, which clarifies that they are the cause of the significant rise in the weighted index value.

9 companies of these 14 large companies achieved 2-diget gains, i.e. 10 percent or more. Gulf Insurance Company took the lead and achieved 50 percent rise in its value in one month. However, they included giant companies which achieved less gains though with bigger impact on the Boursa value rise, such as ZAIN Co. whose prices grew by 12.4 percent after the deal of selling treasury stocks to Oman Tel. Likewise, value of NBK, the largest Boursa company, increased by 6.3 percent and Boubyan Bank by 9.2 percent. The second largest Boursa company, KFH, gained 10.5 percent perhaps due to rumors of adopting a new strategy including a probable merger or acquisition. There are other big and active companies within the 14 large ones which have different goals and they achieved gains: the Commercial Real Estate Co. gained 18.5 percent, the Gulf Cable and Electrical Industries Co. grew by 17.3 percent, the United Real Estate Co., Al-Jazeera Airways, the Commercial Bank of Kuwait, and Boubyan Petrochemical Co. which grew by 14.9 percent, 14 percent, 13.7 percent, and 11.2 percent respectively.

Though the rise is comprehensive and its companies have diverse purposes and are of big scale, there is doubt that the rise is for a short term and should not be pursued without prudence to avoid repetition of what happened in the first quarter of the current year. Liquidity, which is the more important variable, is still weak. Daily average trading value in August scored about KD 14.566 million vis-à-vis KD 42.939 million daily average value for the first quarter. The positive impact for a deal here or exceptional performance there has short-lived impacts. They are discounted in the short term and their impact disappears and is supported by sustained rise in the Boursa liquidity. This may not happen under ordinary conditions.

However, Boursa Kuwait performance during the past part of the year was good but the danger remains latent in its deviation towards harmful speculation depriving it of its rationalism and renders its active cycle short-lived.

Trading Features at Boursa Kuwait
Kuwait Clearing Company issued its report titled “Trading Volume According to Nationality and Category” from 01/01/2017 to 31/08/2017 published on Boursa Kuwait official website. The report
indicated that individuals are still the largest group, their share started to increase and they captured 49.8 percent of total value of sold shares (47.4 percent for the first eight months of 2016) and 49.5 percent of total value of purchased shares (42.3 percent for the first eight months of 2016). Individual investors sold shares worth KD 2.237 billion and purchased shares worth KD 2.227 billion with a net trading, selling, by KD 10.499 million.

The second largest contributor to market liquidity is the clients’ accounts (portfolios) which captured 22.8 percent of total value of sold shares (17.2 percent for the same period of 2016) and 21.3 percent of total value of purchased shares (15.3 percent for the same period of 2016). The sector sold shares worth KD 1.025 billion and purchased shares worth KD 955.648 million, thus making its net trading, more selling, by KD 68.942 million.

The third contributor, is the corporations and companies sector which captured 20.6 percent of total value of purchased shares (32.6 percent for the same period of 2016) and 20.4 percent of total value of sold shares (26.7 percent for the same period of 2016). The sector purchased shares worth KD 924.603 million and sold shares worth KD 915.646 million with a net trading, purchasing, by KD 8.956 million.

The last contributor to liquidity is the investment funds sector which captured 8.6 percent of total value of purchased shares (9.7 percent for the same period of 2016) and 7.1 percent of total value of sold shares (8.7 percent for the same period of 2016). This sector purchased shares worth KD 387.467 million and sold shares worth KD 316.982 million, with a net trading, more purchasing, by KD 70.485 million. Boursa Kuwait continues to be a domestic Boursa with the Kuwaiti investors forming the biggest trading group and sold shares worth KD 3.996 billion capturing 88.9 percent of total value of sold shares (85.9 percent for the same period of 2016) and purchased shares worth KD 3.909 billion, capturing 87 percent of total value of purchased shares (86.2 percent for the same period of 2016). Thus, their net trading, the only one selling, scored KD 86.649 million, which is an indicator of a receding confidence of local traders.

Other investors’ share, out of total value of purchased shares, scored 8.8 percent (9.9 percent for the same period of 2016), and purchased shares worth KD 396.311 million, while their value of sold shares worth KD 340.772 million, 7.6 percent of total value of sold shares (11 percent for the same period of 2016). As a result, their net trading, more purchasing, scored KD 55.539 million. Share of GCC investors, out of total value of purchased shares, formed 4.2 percent (3.8 percent for the same period of 2016), worth KD 188.661 million, while value of sold shares formed 3.5 percent (3.1 percent for the same period of 2016), worth KD 157.551 million, their net trading, purchasing, by about KD 31.111 million.

Relative distribution among nationalities changed from its previous one and became as follows: 87.9 percent for Kuwaitis, 8.2 percent for traders from other nationalities, and 3.9 percent for GCC traders vis-à-vis 86.1 percent, 10.5 percent and 3.5 percent for Kuwaitis, other nationalities and GCC traders respectively for the same period of 2016. This means that Boursa Kuwait remained a local one with the rise in the share of its investors from local traders. However, the turnout is still higher from investors mainly outside the GCC region than from the inside of the GCC region in which an overtrading of individuals is a dominant factor, who also increased their share with the increasing activity of the Boursa. Number of active accounts between the end of December 2016 and the end of August 2017 rose by 23.1 percent (compared to a decrease by -32.2 percent between the end of December 2015 and the end of August 2016). Number of active accounts in the end of August 2017 scored 19,200 accounts, 5.1 percent of total accounts, versus 19,290 accounts in the end of July 2017, 5.1 percent of total accounts for the same month, with a decrease of -0.5 percent during August 2017.

Weekly performance of Boursa Kuwait
The performance of Boursa Kuwait for the last week (3 working days due to the Eid Al-Adha holiday) was mixed compared to the previous one, the traded volume index and number of transactions index showed a decrease, while the traded value index and the general index showed an increase and AlShall Index (value weighted) closed at 423.5 points at the closing of last Thursday, showing an increase of about 5.9 points or about 1.4 percent compared with its level last week and it increased by 60.5 points or about 16.7 percent compared with the end of 2016.

AL-SHALL WEEKLY ECONOMIC REPORT

This article was published on 09/09/2017