A report issued by the Kuwait Financial Centre (Markaz) has revealed that the Kuwaiti market overcame the wave of decline in the past three months, and there is optimism in Saudi Arabia among investors after announcing Aramco’s IPO
Kuwait All Share index extended its gains, posting an increase of 3.7 percent in November. Among Kuwait’s Blue Chip companies, National Bank of Kuwait and Kuwait Finance House were the top gainers with monthly gains of 7.4 percent and 6.6 percent respectively.
During the month, MSCI announced that it would increase the weight of National Bank of Kuwait in its indices. This helped NBK’s shares register sizeable gains over the course of the month.
Kuwait’s Banking Sector was the best performer in November, with the Banking index rising by 5.1 percent while the Financial Services sector was the top loser, falling by 0.7 percent.
Regionally, the S&P GCC composite index gained by 1.3 percent for the month with four of the seven markets posting gains. Kuwait was the best performer in November. Abu Dhabi, Dubai, and Qatar ended November in negative territory, with their indices decreasing by 1.5 percent, 2.5 percent, 0.4 percent respectively.
The long-awaited Saudi Aramco IPO picked up pace with Saudi Arabia announcing the start of IPO process and appointing banks for its book building process earlier in the month.
The final price would be announced on 5th December 2019. Due to the sheer size of the listing and its importance in moving Saudi Arabia towards a non-oil economy, there has been a general optimism around Saudi markets.
However, the gains in emerging GCC markets were truncated towards the close of the month due to MSCI’s rebalancing of its EM indices. This led to passive funds outflow, in turn, causing a slide in GCC markets.
Markaz report also stated that among the GCC Blue Chip companies excluding Kuwait, National Commercial Bank was the top gainer for the month with its stock price rising by 5.7 percent. Mesaieed Petrochemical Holding Co. ranked second among gainers posting a 4.0 percent increase.
The performance of Global equity markets was largely positive with the MSCI World Index gaining 2.6 percent for the month. US equities (S&P 500) extended its gains with a rise of 3.4 percent in November.
Announcements from the US and China that they are close to reaching agreement on the first phase of a trade deal and expectations on it clearing threats of further tension reflected positively in equity markets.
The UK market (FTSE 100 index) closed 1.4 percent higher during November, as investors expect the UK elections to provide a definitive resolution to Brexit. Emerging markets ended the month in negative, with the MSCI EM posting monthly loss of 0.2 percent.
Oil markets closed at USD62.4 per barrel at the end of November, which is 3.6 percent higher than October.
Signs of progress in US-China trade deal and the expectation that the OPEC would continue to maintain production cuts contributed to the increase in oil price while limiting volatility. Oil’s gain comes despite OPEC’s projection of lower oil demand in 2020 and the observation that rivals were pumping more despite a smaller surplus of crude in the global market.