Kuwait markets positive in July on non-oil sector rebound

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Kuwait's markets ended positive for July owing to a rebound in the non-oil sector activity, discovery of new oil reserves, and the news pertinent to the government planning to establish a secondary market for trading government bonds, according to Kuwait Financial Centre (Markaz).

GCC markets remained optimistic, supported by the positive start to the second quarter earnings season in 2024, while US equities were down for the month, weighed by technology stocks, even as inflation continued to ease, stated Markaz in its monthly market review report for July.

Kuwait equity market index gained 4.4% for the month, extending the yearly gains to 6.2%.

The value of real estate transactions in Kuwait rose by 27% y/y to KD853 million ($2.78 billion) in Q2 2024 owing to sizable one-off deals across the main three segments. However, prices in the residential segment continued to moderate, with prices falling by 3.9% y/y in Q2 2024, said Markaz in its report.

Kuwait’s inflation (CPI) eased to 2.8% y/y in June, the slowest pace since November 2020, down from 3.2% y/y in the previous month. The food and beverages component moderated compared to the previous month, but remained elevated at 5.6% y/y in June while growth in housing prices witnessed a notable slowdown to 0.9% y/y, it added.

The GCC country’s non-oil GDP bounced back in Q1 2024, rising 4.7% y/y compared to a 2.3% y/y contraction in the previous quarter driven by strong growth in the manufacturing sector, according to Kuwait CSB.

The discovery of 3.2 billion barrels of oil reserves by KPC (Kuwait Petroleum Corporation), equivalent to Kuwait’s oil production over three years added to the positive investor sentiment as higher possible revenue from oil could help in easing budget deficits in the future, stated Markaz in its report.

Kuwait government has undertaken preliminary steps to establish a market for trading government bonds, according to Arab times. This initiative is expected to support capital expenditure and create a strong ecosystem for debt issuance and trading in Kuwait.

Kuwait banking stocks rose 5.4% during July supported by positive Q2 2024 earnings results. Among banking stocks, Al Ahli Bank of Kuwait (ABK) gained the most at 13.3% during the month following the earnings announcement.

ABK registered net profits of KD29.06 million ($95.8 million) in H1 2024, a growth of 22% y/y. NBK and KFH rose 5.7% and 4.5% respectively in July. KFH recorded a net profit of KD 341.2 million for H1 2024, an increase of 2.3% y/y.

NBK posted a net profit of KD 145.8 million in Q2 2024, up 3.3% y/y due to higher operating income and lower provisions, that were partly offset by higher operating expenses and higher taxes. Among Premier market stocks, Gulf Cables and Electrical Industries Group gained the most at 21.0% during the month.

According to Markaz, GCC markets were mostly positive during the month, with S&P GCC composite index registering a gain of 3.9% for the month.

GCC equity indices, except Oman and Bahrain, registered monthly gains as strong corporate earnings coupled with rising expectation of US Fed rate cut in September lent support to the markets, it added.

However, the total project awards in the GCC witnessed a decline of 19.7% y/y to $51.7 billion in Q2 2024 due to the unprecedented slump of project awards in Qatar coupled with steep fall in UAE contract deals, as reported by Zawya.

Dubai and Abu Dhabi equity indices gained 5.9% and 3.1% respectively during the month, primarily driven by the performance of banking and real estate stocks.

The market is expecting strong loan growth and higher NIMs for banks in the region in the near term.

The share price of FAB rose 4.7% during July as the bank posted a net profit of AED 4.26 billion in Q2 2024, beating analyst estimates.

Emaar Development and Emaar Properties surged 6.1% and 5.2% respectively during the month supported by strong execution and healthy pipeline of projects in H1 2024. Aldar properties’ share price rose 18.1% driven by the appointment of the new CEO.

The Saudi Tadawul index rose 3.7% during July despite IMF’s downward revision of Saudi Arabia’s GDP growth by nearly one percentage point to 1.7% for 2024 due to oil production cuts.

Saudi Aramco share prices fell 1.1% owing to expectations of a fall in Q2 2024 profits due to lower production, while Qatar equity index registered a gain of 1.9% despite the steep fall in natural gas prices, it added.