Kuwait Financial Centre “Markaz” recently released its Monthly Market Review report for the month of November 2022. Kuwait’s All Share Index witnessed an increase in November, posting a monthly gain of 3.6%. Among Boursa Kuwait’s sectoral indices, Technology and Consumer Staples sectors gained the most at 26.5% and 7.4% respectively, while the healthcare sector lost 5.7% for the month. Among Premier Market stocks, ALAFCO Aviation Lease and Finance Co and National Investments Company (NIC) gained the most for the month, rising by 19.6% and 13.4% respectively. Mobile Telecommunications Company and Gulf Bank fell the most for the month at 2.0% and 1.2% respectively. Jazeera Airways reported a net profit of KD 20.77 million for the nine month (Jan – Sep) period in 2022 relative to KD 0.07 million in the same period last year, with a passenger increase of 410% y/y. Kuwait Projects Company (KIPCO) has completed its merger with Qurain Petrochemicals Industry (QPIC), with the merged entity trading under Kuwait Projects Company’s name. The swap ratio for every QPIC share was 2.24 KIPCO shares.
Central Bank of Kuwait kept its policy rate unchanged even as the U.S Fed raised rates by 75 bps in November. Kuwait posted a fiscal deficit of KD 3 billion for FY 21/22, down 72% from the previous year, on the back of increasing oil revenue. National Assembly of Kuwait approved the budget for FY 2022/23, which forecasts a small deficit for the eighth consecutive year. However, with the budget being based on crude oil price assumption of USD 80/bbl. and Kuwait’s crude oil averaging at USD 105/bbl. since the beginning of the year, the country is likely to post a budget surplus which is mainly expected to be used to replenish the General Reserve Fund.
Regionally, most of the GCC Markets ended negative with S&P GCC composite index, falling by 3.9% for the month. Saudi Arabia and Qatar equity indices decreased the most, losing 6.6% and 3.9% over the month respectively. UAE equity indices were mixed, with the Abu Dhabi index rising 1.3% in the month and Dubai index falling 0.2% during the same period.
Abu Dhabi’s quarterly GDP growth rate reached its highest value in six years during Q2 2022, increasing by 11.7% YoY. Inflation in Saudi Arabia slightly eased to 3.0% in October on YoY basis from 3.1% in September. Saudi Arabia’s Q3 2022 real GDP grew by 8.6% y/y with real non-oil GDP growth expanding by 5.9%. According to Fitch, Saudi banks would require additional liquidity injections from the central bank as lending continues to grow faster than deposit growth.
Developed markets’ performance was positive during November with MSCI World and S&P 500 gaining 6.8% and 5.4% respectively. Earlier in the month, U.S Fed increased rates yet again by 75 bps, bringing rates to highest level since 2008. While the central bank expects to hike rates further to curb inflation, it has signaled that future rate hikes could be of smaller magnitude. The headline flash US PMI composite output stood at 46.3 in Mid-November, signaling that the US business activity continued to contract for the fifth month straight. U.K inflation increased faster than expected, reaching a 41-year high of 11.1% in October, up from 10.1% in September. UK government plans to increase taxes by GBP 25 billion and reduce government spending by GBP 30 billion by 2027-28. As a result of these measures, Britain is predicted to have a tax burden of 37.1% of the GDP by 2027-28. UK economy is anticipated to shrink by 1.4% in 2023.
Oil prices marked a sharp decline of 9.9% for November 2022, reversing the gains of the previous month, however still up for the year by 9.8%. Oil price was weighed down by rising COVID-19 cases in China and delay in discussions between EU government representatives on Russian oil price cap. Reports that the price cap being considered is in the range of USD 65-70 per barrel, higher than market expectations also weighed on prices. IEA has lowered its outlook for oil demand in 2023 by 40,000 bpd to 1.61 million bpd citing headwinds such as rising risk of recession coupled with China’s weak economy. Gold prices rose 8.3% in November to 1,768.45 $/oz on account of expectation of slower pace of rate hike by U.S Fed coupled with weakness in U.S Dollar.