Kuwait Monthly Report | September
- The Kuwait
equity space took a hit in line with the rest of the world due to the Covid-19
- The MSCI
Inclusion postponement was a blessing in disguise for Kuwaiti firms and our Kuwait ETF as it has allowed firms time
to stabilize prior to the inclusion inflows.
- The oil price
war in Q1 coupled with the Covid-19 impact has created a buying opportunity
ahead of the MSCI inclusion as most announcement and inclusion premiums have
What has driven this performance?
Kuwait markets ended the month positively with the Kuwait All Share
Index registering a gain of 6.6% in August reflected the broader positive
sentiment across the GCC markets. Regionally, the S&P GCC composite index
gained 6.2%, with all markets in the green. The Premier Market
Index gained 8.1% during the month as 15 out of 19 constituents of the index
saw monthly gains. Among other sectors, the Consumer Goods Index
was the top gainer, rising 9.9%, while the Consumer Services Index saw the
biggest decline, down 5.1% for the month. Among Blue Chips, the National Bank
of Kuwait gained the most at 9.0%, whereas Gulf Bank and Burgan Bank added
12.11% and 10% respectively. Agility Public Warehousing lost 2.5% for the
Market liquidity in August, as indicated by the average daily traded
value, has increased by 30.6% over July to reach KWD 22.28 million, increasing
from KWD 17.04 million a month ago. KFH topped the monthly value traded chart
with shares worth KWD 113.1 million traded during the month. This was followed
by AUB-Bahrain and Shamal Az-Zour Al Oula Power and Water Co. who experienced
trades worth KWD 87.3 million and KWD 86.8 million.
Moreover, Kuwaiti parliament has adopted a new law which will allow
companies to opt for a settlement with creditors or a restructuring plan before
they are forced to declare bankruptcy. This law aims to protect
ailing companies and attract foreign investors. Meanwhile, the finance minister
has highlighted the depletion of the treasury’s liquidity in view of prevailing
low oil prices.
KMEFIC FTSE Kuwait Equity UCITS ETF Performance
Past performance is no guarantee of future performance.
Source: Bloomberg, HANetf. *August figures based on 31.07.20 – 31.08.20
**YTD figures based on 31.12.19 - 31.08.20
***12 Month figures based on 31.08.19 -31.08.20
KMEFIC FTSE Kuwait Equity UCITS ETF
Total Return NAV to Date (up to 31.08.2020)
|KMEFIC FTSE Kuwait Equity ETF (Acc)
|FTSE Kuwait All Cap 15% Capped Index (NTR)
Past performance for the index is
in USD. Past
performance is not an indicator for future results and should not be the sole
factor of consideration when selecting a product. Investors should read the
prospectus of the Issuer (“Prospectus”) before investing and should refer to
the section of the Prospectus entitled ‘Risk Factors’ for further details of
risks associated with an investment in this product. Source: Bloomberg/ HANetf. Data as of 31/08/2020
Budget Reform remains the main
talking point as the budget deficit crunch looms. The current deficit has been bought
about due to increased spending, lower oil prices, as well as the Covid-19
pandemic. As it stands, the finance minister stated that Kuwait does not have
the cash on hand to pay salaries past October. He hopes that
putting a date on this will help get the Public debt law which will allow the
government to borrow up to 65 Billion USD over the next 30 years to cover
budget shortfalls. The Kuwaiti government has warned parliament
that they may pass the law by emergency decree should parliament not pass the
The 1MDB scandal has proven to have more legs than
previously thought as arrests have been made with wealthy businessman as well
as royal family members. This may prove to be a landmark case as Kuwait’s
anti-corruption stance is being actioned as opposed to past grandstanding.
Shamal Al Zour
The Shamal Az-Zour Al-Oula Power and Water Company listed
on Boursa Kuwait on August 16th. Shamal Az-Zour is Kuwait’s first
company established under the independent water and Power plant Law. The plant
supplies about 10% of Kuwait’s installed power capacity and 20% of Kuwait’s
water distillation capacity.
equity markets continued their 5th month of positive results in
August. Kuwait markets gained 6.6% in August as per the All Share Index. Market
liquidity in August has increased 45%. Allowing companies to opt for a
settlement with traders, restructuring plans rather than forced bankruptcy, and
additional structural changes has buoyed sentiments in the equity market. These
parliamentary efforts as well as the public debt law aims to protects local
companies as well as providing assurances to foreign investors regarding
Prices closed up 4.6% at the end of August on the back of signs pointing to an
increase in demand as shown by a larger draw of U.S crude than forecasted.
However, oil demands were as a whole revised downwards due partly to continued
US-China trade tensions as well as lowered jet fuel demand.
overall market sentiments are positive as even small cap stocks seem to be
moving positively. With the expectation of the MSCI inclusion in November,
outlooks are positive going forward.
major talking point for the our Kuwait ETF constituents will be banking as Kuwait banks have
proven outstanding resilience as well as a solid financial position at all
levels of its components. It showed continuous asset growth in its credit
portfolios as well as a stable deposit base. Total customer deposits have
increased by 12% as per semi-annual financial results of the banking sector.
Total customer loans and advances of the 10 Kuwaiti banks also increased at a
growth rate of 9%. The National Bank of Kuwait showed a growth rate of 16% in
terms of customer deposits followed by Kuwait Finance House at a growth rate of
14%. This made Banks to have the largest share of the Kuwait ETF. NBK lead in terms of a price gain for August market wide as a result with
a gain of 9.0%.
|Top 10 Constituents and Weights
| Ahli United Banks B.S.C.
|National Bank of Kuwait
|Mobile Telecommunications Co KSC
|Kuwait Finance House KSCP
|Agility Public Warehousing Co KSC
|Boubyan Bank KSC
|Mabanee Co SAK
|Humansoft Holding Co KSC
|Boubyan Petrochemicals Co
Source: HANetf data as of 31/08/20
KMEFIC FTSE Kuwait Equity UCITS ETF is a UCITS compliant Exchange Traded Fund
domiciled in Ireland.
Our Kuwait ETF tracks the FTSE Kuwait All Cap 15% Capped Index, an index of large, mid
and small cap securities trading on the premier or main market of Kuwait Stock
Exchange. The fund seeks to provide targeted exposure to an emerging market
with significant growth potential.
remember that the value of your investment may go down as well as up and past
performance is no indication of future performance.
|London Stock Exchange
|London Stock Exchange
|Deutsche Boerse Xetra
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