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Kuwait Monthly Economic Brief

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Kuwait Monthly Economic Brief NOVEMBER 2007 KUWAIT MONTHLY ECONOMIC BRIEF Salhiya Complex - Gate 8 - Floor 5 P.O.Box: 1520, Safat, Kuwait 13016 Tel.: +965 245 8383 - Fax: +965 245 8363 Email: [email protected] Kuwait • New York • Cayman Island • Dubai Webpage: www.univestgroup.com NOTICE AND DISCLAIMER / LIMITATION OF LIABILITY Data and information released/provided in this report are provided on an “As Is” basis, without warranty of any kind, including without limitation the warranties of merchantability, fitness for a particular purpose and non-infringement. Analysis provided is based on financial and economic data gathered using primary research techniques. Availability of this data and information does not constitute scientific publication. Univest Group does not assume responsibility for any omissions and/or errors in data provided by institutions referenced and quoted in this document. Univest Group and its research team make no representation or warranty, express or implied, including without limitation any warranties or merchantability or fitness for a particular purpose or warranties as to the identity or ownership of data or information, the quality, accuracy or completeness of data or information, or that the use of such data or information will not infringe any patent, intellectual property or proprietary rights of any party. Univest Group shall not be liable for any claim for any loss, harm, illness or other damage or injury arising from access to or use of data or information, including without limitation any direct, indirect, incidental, exemplary, special or consequential damages, even if advised of the possibility of such damages. Appropriate acknowledgment of Univest Group should be made in any publications or other disclosures concerning data or information made available in this report. Kuwait Monthly Economic Brief - November 2007 FINANCIAL MARKET DEVELOPMENTS STOCK MARKET SNAPSHOT Table 1.2 KSE Sectoral Indices: Volatility vs. Risk YTD ∆ Beta Alpha During the month of November the value of completed deals on the Banking Sector 38.70% 0.894 0.0007 Kuwaiti Stock Exchange (KSE) stood at KD 2,477 million, down by 24.42% month-on-month. The number of transactions executed stood at 153,182 Investments Sector 24.26% 1.275 -0.00003 deals, leading to an average value per deal of KD 16,172. The November Insurance Sector 4.39% 0.292 -0.0000 level constituted a monthly drop of 6.29%. Real Estate Sector 14.01% 1.183 -0.0004 Between January and November 2007, the total number of transactions Industrial Sector 21.33% 1.025 0.00002 executed stood at 2.04 million. Trade volume stood at 65,288 million Services Sector 7.56% 0.832 -0.0004 shares, with total trading value rising to KD 34,553 million by month Food Sector 57.09% 0.812 0.0014 end. The investments sector ranked first in terms of the volume of trades executed, followed by the services and real estate sectors at 29.40%, Non-Kuwaiti 30.37% 0.682 0.0006 25.62% and 20.29% respectively. In terms of value, the services sector Source: Univest Research continued to rank first at 29.41% of outstanding total. KUWAIT STOCK INDEX Table 1.1 KSE Trading Activity Breakdown Transactions Volume Value By the end of November 2007, Kuwaiti Stock Exchange Index stood at , 12,052.00, down from the previous month s close level of 12,767.00. The Banking Sector 7.22% 6.47% 14.68% November level constituted an increase of 20.55% since the beginning Investments Sector 29.40% 32.20% 25.50% of the year. Insurance Sector 0.13% 0.13% 0.13% Chart 1.1 KSE Value Index Real Estate Sector 20.29% 26.98% 13.46% 135 01/01/2007 - 11/30/2007 High: 13,175.20 (10/21/2007) Closing: 12,052.00 (11/29/2007) Low: 9,584.50 ( 10/02/2007) Industrial Sector 9.33% 7.08% 10.54% 130 125 Services Sector 25.62% 18.30% 29.41% 120 Food Sector 1.68% 1.44% 1.23% 115 Non-Kuwaiti 6.33% 7.41% 5.04% 110 Source: Kuwait Stock Exchange 105 The food sector led the market in terms of growth, with its index recording 100 a ten-month increase of 57.09%. The sector’s Beta – a measure of the 95 KSE sector’s returns sensitivity to changes in the returns of the broad market 25 per. Mov. Avg. (KSE) stood at 0.812 by the end of November, dropping from the October level 90 of 0.846. The sector’s residual risk – Alpha – stood at 0.0014. 85 Source: Univest Research The banking sector ranked second, with its value index standing at 138.70 points by the end of November. Univest conducted a study that analyzed By the end of November 2007, the weighted index dropped slightly from the ’increase pattern’ in the sector’s index over a five-year period relative the October level of 737.93 points to 690.75 points. to that recorded on the share price level of securities listed under the sector, concluding that the increase recorded on the index level has BANKING SECTOR surpassed any upward movement recorded on the share price level of relevant securities; hinting to a flaw in the ’divisor’ employed to calculate By end-November, the banking sector’s index stood at 13,901.00 points, the index following the listing of Boubyan Bank on the exchange. down by 4.10% month-on-month. The November level, however, constituted an increase of 39.04% since the beginning of the year. Between 2002 and 2007, while the banking sector’s value index increased to reach 577.19 points, that of securities comprising the biggest market Between January and November 2007, the total value of trades executed capitalization namely Kuwait Finance House (KFIN.KSE), National Bank of in the sector stood at KD 5,072 million; representing around 14.68% of Kuwait (NBK.KSE) and Gulf Bank of Kuwait (GBK.KSE) stood at 321.74, 220.62 outstanding total. and 289.23 respectively. The average value per deal in the banking sector stood at KD 34,485; The investment sector continued to exhibit more volatility than the rest with NBK recording the highest value in this category at an average of of the market recording the highest beta at 1.275, down from the October KD 58,764 per transaction. figure of 1.277. The investment sector also recorded a negative alpha, in a clear indication to its continual failure to perform on par with other sectors in KSE. Page 1 FINANCIAL MARKET DEVELOPMENTS Kuwait Monthly Economic Brief - November 2007 Chart 1.2 Banking Sector Value Index Chart 1.3 Investment Sector Value Index 01/01/2007 - 11/30/2007 High: 15,128.40 (01/16/2007) 01/01/2007 - 11/30/2007 High: 17,251.80 (10/21/2007) 150 Closing: 13,901.00 (11/29/2007) Low: 9,942.20 ( 09/18/2007) 140 Closing: 15,373.60 (11/29/2007) Low: 11,867.80 ( 02/11/2007) 135 140 130 130 125 120 120 115 110 110 KSE INV 100 105 25 per. Mov. Avg. (INV) KSE 100 90 BANKS 25 per. Mov. Avg. (BANKS) 95 80 Source: Univest Research Source: Univest Research KFIN, NBK and Boubyan Bank (BOUBYAN.KSE) continued to lead the The average value per deal in the investments sector stood at KD 14,270; trading activity in the sector; combined these banks accounted for with Kuwait Projects Company (KPROJ.KSE) recording the highest value 59.88% of total banking sector trading activity since the beginning of the in this category at an average of KD 38,268; lower by 0.44% from the , year; the equivalent of KD 3,037 million in absolute terms. company s record in October. , Table 1.3 Banking Sector s Top Five: Ranked by Value In terms of value of transactions executed, the top three companies in Deals Volume Value this category continued to be KPROJ, Al Madina Finance & Investments (ALMADINA.KSE) and National Investments Company (NINV.KSE) at 11.76%, Kuwait Finance House 20.80% 11.00% 23.32% 8.29% and 6.09% respectively. National Bank of Kuwait 11.80% 10.87% 20.10% , Table 1.5 Investment Sector s Top Five: Ranked by Value Boubyan Bank K.S.C. 31.04% 30.68% 16.46% Deals Volume Value Burgan Bank 10.26% 18.42% 14.57% Kuwait Projects Co 4.52% 6.36% 11.76% Commercial Bank of Kuwait 9.13% 9.24% 10.45% Al Madina Finance & Investment 6.87% 6.06% 8.29% Source: Kuwait Stock Exchange National Investments Co 3.19% 3.00% 6.09% Most listed securities in this category recorded a drop in their share Noor Financial Investment Co 4.97% 4.33% 5.47% prices, with the steepest drops recorded by KFIN, Gulf Bank of Kuwait Ektitab Holding 6.12% 7.67% 5.26% (GBK.KSE) and NBK at -9.46%, -6.38% and -5.61% respectively. Source: Kuwait Stock Exchange BOUBYAN, Burgan Bank (BURG.KSE) and NBK continued to record the highest volatility levels with a beta of 1.23, 1.22 and 1.00 respectively. On a month-to-month basis, most investment companies continued In terms of risk-adjusted return, GBK, Commercial Bank of Kuwait (CBK. to record negative share price changes. The companies that recorded KSE) and BURG underperformed, failing to keep up with the rest of the the highest share price increase on between October and November market. were Burgan Group (BURGGRP.KSE), National International Holding (NIH. KSE) and Al Safat Investment (ALSAFAT.KSE) at 12.00%, 8.47% and 5.08% Table 1.4 Banks: Volatility vs.
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