Kuwait: Kuwait Financial Centre “Markaz” released its Monthly Market Review report for December 2024. Kuwait equities, which declined in 2023, was among the top performers in 2024.

Kuwait equity performance in 2024 was driven by positive corporate earnings across different sectors, especially in banking. Kuwait’s All Share Index posted a yearly gain of 8.0%, with technology and consumer staples gaining the most for the year, rising 79.9% and 51.6% respectively. The index’s gain was also supported by the banking sector index which increased by 9.9% in 2024. The rate cuts by Central Bank of Kuwait (CBK) in H2 2024 shall probably result in an increase in credit growth. Among banking stocks, Kuwait International Bank (KIB) and Commercial Bank of Kuwait were the biggest gainers, with a return of 25.7% and 24.0% respectively. KIB’s net profit in 9M 2024 amounted to KD 16.4 million, an increase of 137% compared to KD 6.9 million in 9M 2023.

Kuwait’s Main Market index increased by 24.0% in 2024, as against an annual increase of 4.8% in the Premier Market index, driven by the performance of stocks such as Commercial Bank of Kuwait and IFA Hotels and Resorts with 2024 returns of 24.0% and 189.1%, respectively. However, the performance of the main market index had limited effect on the Kuwait All Share Index as it comprises of less than 20% of the total market capitalization of the All Share Index. Among Premier Market stocks, Mezzan Holding Company and Commercial Real Estate Company were the largest gainers, with a return of 56.5% and 48.0% respectively, for the year. Mezzan Holding Company’s share price increase was driven by a positive net profit of KD 12.73 million for 2023, compared against losses in the previous year, as well as indications of higher profitability in 2024 reflected by a net profit of KD 12.01 million for 9M 2024.

GCC equity markets were up 2.0% for the year 2024, indicated by S&P GCC composite index. Individually, GCC Markets were mostly positive during the year, with only Abu Dhabi and Qatar equity indices ending the year registering losses. Dubai’s equity index was the largest gainer in the GCC, surging 27.1% during the year on the back of a strong economic outlook supported by real estate and tourism sectors. The Dubai market was valued slightly above its 5-year median P/E (9.3x) but remains a relatively undervalued market compared to GCC peers. Emaar Developers and Emaar Properties (parent company of Emaar Developers) share prices surged with a return of 91.6% and 62.2% respectively during the year. Emaar Development’s property sales rose by 66% in 9M 2024 to AED 48 billion (US$ 13.1 billion), compared to AED 28.9 billion (US$ 7.9 billion) in 9M 2023. Saudi Arabia’s equity market was positive, gaining 0.6% for the year. Amongst the blue chips, Al Rajhi Bank had a return of 9.4% for the year, while Saudi Aramco had a return of -15.0% owing to the impact of continued oil production cuts through the year. Qatar equity index declined the most, falling by 2.4% for the year. Abu Dhabi markets fell 1.7% for the year driven by poor returns in large stocks such as Emirates Telecommunications Group Company and First Abu Dhabi Bank, which declined by 16.9% and 1.6%, respectively for the year.

The Kuwaiti Cabinet endorsed a draft resolution, in December 2024, issuing a law imposing a 15% tax on multinational entities, which have business in more than one country. The new tax law which came into effect as of 1st January 2025 and aims to curb tax evasion and prevent sending tax revenues to other countries. UAE will impose a domestic minimum top-up tax (DMTT) of 15% on large multinational companies operating in the country in January to boost non-oil revenue and make tax avoidance harder.

Most GCC central banks adopted a monetary easing policy in line with the FED. Central Bank reduced interest rates by about 100 bps in H2 2024, except for Qatar which cut rates by a total of 115 bps in H2 2024 and Kuwait which cut its rates by only 25 bps in September 2024.

Global markets ended the year positively, with easing inflation leading to interest rate cuts by central banks across the world. The MSCI World and S&P 500 indices rose 17.0% and 23.3% respectively during the year. US equities were driven by further concentration amongst large technology stocks, led by the chase behind AI. The US Fed reduced interest rates by 50-bps in September 25-bps in November and 25-bps in December, following signs of easing inflation and moderation in job growth. The markets have priced in up to two 25-bps rate cuts in 2025, in line with the Fed’s December projections of a terminal benchmark funds rate of 3.75% to 4.00% by the end of 2025. The MSCI EM index relatively underperformed with yearly gains of 5.1% weighed down by a negative performance in South Korea of -9.6% for the year. This was despite the strong performance of Taiwan which grew 28.5% during the year. Chinese markets grew 12.6% in 2024, stimulated by the injection of government stimulus.

U.S headline inflation was moderate at 2.7% y/y in November 2024, compared to a 12-month high of 3.5% y/y in March 2024. There were three rate cuts during the year by the Fed, by a total of 100 bps. In the UK, headline inflation rose by 2.6% y/y in November 2024, up from 2.3% y/y in October 2024, and the highest inflation since March 2024. There was a divergence in monetary policy in December 2024, with the Bank of England keeping rates steady, while the European Central Bank cut rates by 25 bps in the month in line with the Fed.

The yield on the 10-year US Treasury notes, peaked for the year at 4.70% in April 2024, and closed the year at 4.58%. This is 70 bps higher than the 2023 close of 3.88%. The un-inversion of the yield curve, following rate cuts in H2 2024, is visible in the change in the 10Y-2Y spread which changed from -39 bps at the end of 2023 to 32.5 bps in 2024.

Oil price settled at USD 74.6 per barrel, recording a yearly decline of 3.1% in 2024. Oil prices fell despite the continuation of OPEC+ oil production cuts through 2024, owing to a decline in demand in China as well as additional production by the U.S. and other non-OPEC producers. Gold prices closed at USD 2,623.8/oz., a gain of 27.2% in 2024 driven by purchases by central banks, expectations of accommodative monetary policies by global central banks as well as geopolitical tensions. Natural gas prices were up 43.8% during 2024 with a heightened demand stemming from anticipated below-normal temperatures in Asia and Europe, coupled with an estimated decline in U.S inventories for the year.

The outlook for global asset classes for 2025 is dependent on the monetary policy decisions by the U.S. Fed, coupled with policy stances of the incoming U.S. President. Global markets have priced in a more measured approach by central banks with up to two 25-bps rate cuts by the Fed in 2025. The extension of OPEC+ production cuts to April 2025 is expected to support prices but continuing weak demand from China is likely to lead to range-bound oil prices in 2025. OPEC production cuts, regional geopolitical developments and the potential impact of tariffs being imposed by the current US government, are major themes that will affect GCC markets in 2025.

About Kuwait Financial Centre “Markaz”

Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over KD 1.39 billion (USD 4.56 billion) as of 30 September 2024. Markaz was listed on the Boursa Kuwait in 1997. Over the years, Markaz has pioneered innovation through the creation of new investment channels. These channels enjoy unique characteristics and help Markaz widen investors’ horizons. Examples include Mumtaz (the first domestic mutual fund), MREF (the first real estate investment fund in Kuwait), and Forsa Financial Fund (the first options market maker in the GCC since 2005), all conceptualized, established, and managed by Markaz.

For further information, please contact:
Sondos Saad
Corporate Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Tel: +965 2224 8000
Email: Ssaad@markaz.com
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