(MENAFN- TRACCS) Kuwait, October 02, 2022: Kuwait Financial Centre “Markaz” recently released its Monthly Market Review report for the month of September 2022. Kuwait’s All Share Index witnessed a decline in September, posting a monthly loss of 7.8%. Among Boursa Kuwait’s sectors, Healthcare sector gained the most at 6.3%, while Industrials and Consumer Staples sectors lost 16.2% and 12.5% respectively for the month.
Among Premier Market stocks, Mabanee Company gained the most for the month, rising by 4.1%. Gulf Cable and Agility fell the most for the month at 26.2% and 20.7% respectively. According to MEED projects, Kuwait ranked last on the projects market among GCC countries, awarding only USD 28 million in contracts during August. Competition Protection Authority has received requests to establish digital banks in Kuwait from 3 alliances, including 7 listed companies.
The licensing applications submitted include i) Boubyan Bank’s alliance with Zain Telecom Group, ii) the alliance of “Ooredoo”, Warba Bank, Kuwait Investment Company and Al-Manar Finance and Leasing Company, and iii) the alliance of Kuwait and Middle East Financial Investment Company. Agility, which was expected to enter digital banking space, did not submit its application by the deadline date.
Central Bank of Kuwait raised its discount rate by 25 bps to 3.0% in the month of September. The move came on the back of another 75 bps rate increase by the U.S. Fed. Central banks in most of the GCC markets - Bahrain, UAE, Saudi Arabia and Qatar matched the 75 bps interest rate hike by U.S. Fed. Fed rates have reached their peak since 2008, currently in the range of 3.0% – 3.25%. Since Kuwait Dinar is pegged to a basket of currencies that includes U.S.
dollars, the Central Bank of Kuwait continues to take a less hawkish stance in raising the interest rates, as compared to other GCC counterparts. As projected by FOMC, U.S. Fed rates are expected to increase further, hitting 4.25-4.5% by end of 2022 and 4.5-4.75% by 2023 end. Inflation in Kuwait rose by 4.15% y/y in August, with food prices rising by 6.89% y/y. Kuwait’s inflation slowed down for the fourth straight month and food price inflation marked its lowest since August 2020. Fitch affirmed a positive outlook for the country’s economic growth by revising estimated credit growth for 2022 upwards to 9.7% from 7.6%.
Regionally, most of the GCC Markets moved in tandem with global markets with S&P GCC composite index, falling by 7.0% for the month. All GCC markets ended negative for the month with Saudi Arabia and Qatar equity indices falling the most, losing 7.1% and 5.4% respectively. The decline in GCC markets was driven by lower oil prices, concerns over global economic growth and higher than expected inflation in the United States. Dubai equity index posted a decline of 3.0% over the same period and Abu Dhabi index fell 1.3% for the month.
According to Moody’s, UAE’s real GDP growth is estimated at 6%-7% in 2022. As per S&P forecasts, Saudi Arabia’s GDP would grow at 7.5% in 2022, with a financial surplus of about 6.3% of GDP. On account of higher food and transport prices, Saudi Arabia’s CPI Inflation was up 3% y/y. Moody’s also affirmed that GCC countries in 2022 will record their highest oil production since 2016, and a GDP growth that will be among the highest in the world. The rating agency mentioned oil prices are expected to reach USD 50-70/bbl. in 2024.
Developed markets’ performance was negative during the month of September with MSCI World and S&P 500 losing 9.5% and 9.3% respectively. The continuous and higher than expected interest rate hike projections by U.S. Fed officials to suppress inflation has led to concerns over economic growth among investors. U.S. inflation rose by 8.3% y/y for the month. Inflation was majorly driven by the Food & Beverages sector growing at 11.4% y-o-y in August.
Goldman Sachs has revised down its year-end target for S&P 500 by 16% to 3,600 points citing upward shift in expected path of Fed’s rate hikes. U.K. pound recorded a 37-year low against U.S dollar with U.K government announcing huge debt financed tax cuts. European equities were negative on account of the region experiencing inflation of 9.1% y/y in August. China’s equity index also declined during the month due to contractions in output from power outage and COVID–19 lockdown restrictions.
Oil prices declined by 8.8% for September 2022, although remaining with a year-to-date increase of 13.1%. Oil prices weighed down due to concerns over recession and a steady decline in global demand, in addition to a potential Iran nuclear deal that is expected to boost oil supply.
However, OPEC+ cut down on production, falling short of 3.583 million bpd in August, equivalent to 3.5% of global oil demand and expectation of increase in demand from China project some positive outlook for oil prices. In addition, OPEC+ stated that it anticipates demand for oil to be strong during the rest of 2022 and 2023. Gold prices were negative for the month, dropping 3.0% to 1660.00 $/oz on account of strength in the U.S. Dollar on the back of U.S. Fed’s rate hikes. Natural gas declined 25.9% for the month.
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