14/07/2014 07:12 AST
Kuwait’s bourse stood out in an otherwise sluggish region yesterday as investors were encouraged by government spending plans, a positive outlook for the banking sector and a string of debt settlement deals.
The Kuwaiti index climbed 1.5% to a one-month closing high of 7,179 points, its biggest daily gain since October. Trading volume picked up to its highest level since mid-May, a positive technical sign.
Fouad Darwish, head of brokerage services at Global Investment House in Kuwait, said investors’ optimism was fuelled by expectations for higher state investment in long-delayed infrastructure projects, as well as signs of recovery in the corporate and banking sectors.
The stock benchmark has been declining for most of this year and is still down 5% year-to-date because of political tensions within the ruling elite as well as financial trouble at a number of local companies.
But over the last two months, a number of companies have announced deals with creditors to settle their debts, including Al Madina for Finance and Investment Co, Al Mal Investment and COAST Investment and Development.
According to a report in Kuwait’s Argaam newspaper, listed Kuwaiti companies have settled a total of 139.6mn dinars ($495mn) in debts with creditors this year.
Also, Kuwait’s banks are expected to perform much better than last year. Analysts surveyed by Reuters forecast on average that the profit of the country’s largest lender, National Bank of Kuwait, will surge 59% in the second quarter. The quarterly profit of smaller Burgan Bank is expected to jump 43%.
Earlier this month, Kuwait’s market was weakened by public protests, dispersed by police, in support of opposition politician Musallam al-Barrak, who had been detained for questioning after allegedly insulting Kuwait’s judiciary. But his release on bail last week eased tensions, at least temporarily.
Markets in Dubai and Abu Dhabi moved very little as trading volumes fell on both bourses in a typical Ramadan lull.
Dubai’s largest listed developer, Emaar Properties, pulled back 1.4% after jumping 3.8% in the last session; it offset gains made by smaller stocks.
The market index edged up just 0.1% to 4,580 points after meeting resistance around the 4,600-point level, which is close to the lows seen in May and early June.
Shares in Abu Dhabi’s Dana Gas jumped 4.3% after the company said an arbitration tribunal in London had awarded it the right to receive some outstanding payments from the government of Iraq’s Kurdistan region.
But shares in another local firm with assets in Iraq, Abu Dhabi National Energy Company, dropped 3.4% as heavy fighting took place less than 50 miles (80 km) from Baghdad and Iraq’s parliament failed to move towards forming a new government.
Qatar’s benchmark was down 0.3% as its four-day rally lost steam and trading volumes fell. Industries Qatar was the main drag, falling 1.6%.
Saudi Arabia’s main index edged up 0.1%. Saudi International Petrochemical Co (Sipchem) was among the main supports, jumping 3.8% after its second-quarter profit surged 41% and was 39% higher than analysts’ average estimate.
Shares in top petrochemical producer Saudi Basic Industries (Sabic) rose 1.0%. Sabic has yet to report its second-quarter earnings; analysts surveyed by Reuters expect them to rise 6.3%.
Saudi Arabian Mining Co (Ma’aden) also rose 1.0% after the company and Canada’s Barrick Gold said they would jointly run its Jabal Sayid copper asset in the kingdom, a move that could see the long-delayed mine finally begin production in late 2015.
Al Rajhi Bank was the main drag on the index, falling 1.9%, after the lender posted a fourth successive quarterly profit decline. The bank said it made 1.95bn riyals ($520mn) in the second quarter, in line with analysts’ average forecast of 1.97bn riyals.
Gulf Times
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