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Kuwait Monthly Report | November

 

  • Increased volatility is expected in Kuwaiti markets as Q3 earnings results are released and the MSCI inclusion date nears.
  • The MSCI inclusion is expected to drive up the Kuwaiti stock market leading up to the event in November through buy side pressure, with investors able to gain access to the potential gains through our Kuwait ETF.
  • The oil price war in Q1, weak Q3 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 in a neutral state with the Kuwait All Share Index registering no significant gains or losses in October.[1] This month the Kuwaiti market has witnessed increased volatility as MSCI inclusion date is getting closer. Regionally, The S&P GCC composite index gained 1.36%, with all markets, except Abu Dhabi, ending the month in positive territory. Premier Market Index declined by -0.3% during October as 6 out of 20 constituents of the index saw monthly losses, with the biggest company by market, NBK, declining by -2.87%.[2] Among Kuwait sectors, Oil & Gas and Industrials were the top gainers, rising 2.4%, while Technology and Real Estate index saw the biggest decline, down -4.8% for the month. Among blue chips, Human Soft Holding Co gained the most at 12.23%, followed by Kuwait International Bank gaining 11.29%, while Mabanee Co lost -11.23% for the month.[3]

Market liquidity in October, as indicated by the average daily traded value, has increased by 6.5% over previous month to KWD 1,146million, with the most actively traded companies being Kuwait Finance House (KFH), National Bank of Kuwait (NBK) and Ahli United Bank (AUB).[4]

 

KMEFIC FTSE Kuwait Equity UCITS ETF Performance (Kuwait ETF)

October 12 Month* 
 0.48% -3.22% 

Past performance is no guarantee of future performance. Source: Bloomberg, HANetf *12 Month figures based on 31.10.19 -31.10.20

 

KMEFIC FTSE Kuwait Equity UCITS ETF

Total Return NAV to Date (up to 31/10/2020)

 

1M

3M

6M

YTD

12M

Since Inception

KMEFIC FTSE Kuwait Equity ETF (Acc)

0.48%

11.61%

13.68%

-12.93%

-3.22%

-2.85%

FTSE Kuwait All Cap 15% Capped Index (NTR)

0.60%

11.67%

14.40%

-10.35%

-0.30%

0.65%

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 31/10/2020

 

Industry News

NBK issuing securities of up to KWD 150mn

NBK Supplementary Disclosure stated the Capital Markets Authority's approval on the contents of the private placement prospectus for issuing securities in an amount up to KD 150 million.[5]    

KFH & NBK Credit Agreement

National Bank of Kuwait and Kuwait Finance House signed a KWD 1 billion syndicated credit agreement with Kuwait petroleum corporation (KPC) to finance general capital expenditure.[6]    

Market Making Activity Strengthens

The Capital markets authority issued a renewable license for Kuwait Financial Center Company K.P.S.C to practice the market maker activity for three years. This in turn will lead to improved liquidity for Kuwaiti markets as two other financial institutions have also gained a license, leading to more liquidity and stability within markets.[7]

 

Outlook

GCC equity markets continued their 7th month of positive results in October. Kuwait markets remained constant for October as per the All Share Index. Market liquidity in October has increased 6.5%.

S&P rating agency estimates Kuwait’s GDP to fall by -7.0% in 2020 and economic recovery to gain momentum in 2022.

Oil prices closed at $37.12 per barrel at the end of October 2020, posting a monthly loss of -8.7%. 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 mixed as there have been some significant gainers and losers for this month as Q3 results are being published. The MSCI inclusion this month, 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 Borsa 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:

Agility will invest KWD 20 million on more technology ventures at the discretion of the fund Managers, while its subsidiary wins a new concession with an estimated revenue of $2 million (around KWD600) per year.[9] 

National Bank of Kuwait & Kuwait Finance House: KFH Group and Aayan Leasing and Investment Co. have agreed on the settlement of the debt owed by Aayan to KFH Group valued at KWD 17.5 million following the ratification of Aayan’s amended debts payment plan by the Court of Cassation on 19 August 2020. Aayan has also paid KWD 3.2 million in cash to KFH Group in addition the transfer of 16.3% of its ownership.[10]

Top 10 Constituents and Weights

(%)

Kuwait Finance House KSCP

15.31%

Ahli United Bank BSC

14.78%

Mobile Telecommunications Co K

14.75%

National Bank of Kuwait SAKP

14.21%

Agility Public Warehousing Co

8.54%

Boubyan Bank KSCP

6.60%

Gulf Bank KSCP

4.71%

Mabanee Co SAK

4.20%

Humansoft Holding Co KSC

3.49%

Warba Bank KSCP

2.60%

 

 

Source: Bloomberg/HANetf. Data as of 31.10.20

 

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 fund 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 KUW8G.DE IE00BGPBVS44 BJ9ZLG1 EUR

 

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