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Kuwait Monthly Report | October

  • The MSCI inclusion is expected to drive up the Kuwaiti stock market leading up to the event in November through buy side pressure, benefiting many constituents of our Kuwait ETF  
  • Kuwait’s Emirs demise caused a temporary intraday decline of 3.4% which recovered as markets opened back up in the first days of October. 
  • The oil price war in Q1, weak Q2 earnings & Covid-19 impact has created a buying opportunity ahead of the MSCI inclusion as most announcement and inclusion premiums have been wiped.

 

Performance Review

Kuwait markets ended the month positively, with the Kuwait All Share Index registering a gain of 2.56% in September[1]. A temporary sharp intraday decline of -3.4% in the Kuwait All Share Index was attributable to the sad event of the passing of the Kuwaiti Emir. The effects of the temporary decline in the stock market have been reversed in the opening few days of October.

Regionally, The S&P GCC composite index gained 2.5%, with all markets except Abu Dhabi and Oman ending the month in positive territory. Premier Market Index gained 2.24% during the month as 15 out of 20 constituents of the index saw monthly gains[2]. Among Kuwait sectors, insurance was the top gainer, rising 8.3%, while the consumer goods index saw the biggest decline, down -3.6% for the month. Among blue chips, Kuwait Finance House (KFH) gained the most at 5.6%, followed by Agility Public Warehousing gaining 5.3%, while Mobile Telecommunications (Zain) lost -2.7% for the month. Fitch has affirmed KFH’s ratings at A+ with stable outlook.[3]

 

KMEFIC FTSE Kuwait Equity UCITS ETF Performance


September*


YTD
**


12 Month
***


2.79%


-13.35%


-2.5%

Past performance is no guarantee of future performance.

Source: Bloomberg, HANetf * September figures based on 31.08.20 – 30.09.20 **YTD figures based on 31.12.19 - 30.09.20 ***12 Month figures based on 30.09.19 -30.09.20

 

Market liquidity in September, as indicated by the average daily traded value, has increased by 44% over previous month to USD $165million[4].

Moreover, Moody’s credit rating agency has downgraded Kuwait’s sovereign credit rating two notches from Aa2 to A1. This is owed to increased liquidity risk due to rapidly depleting liquid reserves and weak institutional strength due to its inability to adjust fiscal policy as the expenditure structure remains rigid.

 

KMEFIC FTSE Kuwait Equity ETF 

Total Return NAV to Date (up to 30/09/2020)

 

1M

3M

6M

YTD

12M

Since Inception

KMEFIC FTSE Kuwait Equity ETF (Acc)

2.79 %

8.65%

16.12%

-13.35%

-2.5%

-3.31%

FTSE Kuwait All Cap 15% Capped Index (NTR)

2.74%

8.71%

20.35%

-10.89%

0.15%

0.05%

 

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 30/09/2020

 

Industry News

Agility PPP Deal

Kuwait-based Agility Public Warehousing Company KSCP has announced the value of its public private partnership with Public Authority for Housing Welfare (PAHW), at KD 104 million ($340 million). Under the agreement, the public warehousing company, a fully owned subsidiary of Agility, provides the development with 1.2 million sqm of land for industrial and storage zones, plus a work camp in Sabah Al Ahmed Residential Area for 30 years[5].

Shariah supervision

The Central Bank of Kuwait (CBK) has approved the establishment of a Higher Committee of Shariah Supervision to underpin the governance of Shariah supervision and compliance in Islamic finance and banking institutions based on international best practices[6].

Boursa Kuwait Listing

Boursa Kuwait, following its successful IPO, surged more than 10 times in its trading debut this month, as it became the third publicly traded exchange in the Middle East after the Dubai Financial Market and Tel Aviv Stock Exchange respectively[7].

 

Outlook

GCC equity markets continued their 6th month of positive results in August. Kuwait markets gained 2.56% in September as per the All Share Index. Market liquidity in August has increased 44%.

S&P’s rating agency estimates Kuwait’s GDP to fall by 7.0% in 2020, with economic recovery gaining momentum in 2022.

Oil prices closed at $41.0 per barrel at the end of September 2020, posting a monthly loss of 9.6%. Persisting Covid-19 fears, renewal of some lockdown restrictions in the Eurozone and expectation of lower oil imports by China have led to fall in prices.[8]

However overall market sentiments are positive as even small cap stocks seem to be moving positively. The MSCI inclusion in November 2020, with an initial weighting of approximately 0.69%, is expected to drive up to $10 Billion of active and passive flows into companies listed on Boursa Kuwait. This expectation in turn is expected to drive up the stock market as active investors will attempt to profit from this event.

 

Constituent News

Agility Public Warehousing Co will invest KWD 20 million ($65.5 million) in alternative technologies, in cooperation with the US-based Colle Capital Venture Fund.[9]

National Bank of Kuwait (NBK) & Kuwait Finance House (KFH) have signed a credit facility agreement worth KWD 1 billion ($3.0 billion) with Kuwait Petroleum Corporation (KPC) to fund the KPC's capital expenditure.[10]

Top 10 Constituents and Weights

(%)

Kuwait Finance House KSCP

15.34%

Ahli United Bank BSC

14.71%

National Bank of Kuwait SAKP

14.69%

Mobile Telecommunications Co K

14.50%

Agility Public Warehousing Co

8.46%

Boubyan Bank KSCP

6.59%

Mabanee Co SAK

4.75%

Gulf Bank KSCP

4.71%

Humansoft Holding Co KSC

3.12%

Warba Bank KSCP

2.73%

 

 

 

Source: HANetf, data as of 30/09/2020

 

 

Fund Details

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 Kuwait ETF seeks to provide targeted exposure to an emerging market with significant growth potential.  

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance.

EXCHANGE BB CODE RIC ISIN SEDOL CCY
London Stock Exchange KUW8 LN KUW8.L  IE00BGPBVS44 BGY9KV5 USD
London Stock Exchange  KUWP LN KUWP.L IE00BGPBVS44 BGSXQZ9  GBP
Borsa Italiana   KUW8 IM KUW8.MI IE00BGPBVS44 BGSGKH8 EUR
Deutsche Boerse Xetra KUW8 GY KUW8.DE DE000A2PD3R9 BJ9ZLG1 EUR

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