Kuwait Times

Published Date: November 01, 2009

KUWAIT: Kuwait Stock Exchange (KSE) continued its downward trend for the third consecutive week reaching its lowest level since May 25. The down move is fueled by investors' fear regarding the third quarter results which are still showing losses specially seen across the troubled financial sector causing a wide sell-off spree this week.

A retreat was witnessed on the large capitalization stocks which added to the index loss. As measured by Global's weighted General Index, the KSE was down by 5.59% percent at the end of the week and closed at 203.70 points. For the month of October 2009, huge loss were seen in the Kuwaiti stock market reaching 7.19 percent while on a year-to-date basis, the index is down by 1.32 percent. Also, Kuwait Stock Exchange (KSE) price index was down for the week, dropping by 260.40 points (3.42 percent) to close a
t 7,347.50 points. The market capitalization reached KD32.96bn. Market breadth was highly skewed towards decliners this week as out of 162 shares traded, 120 shares retreated, against only 20 stocks that closed at higher prices.

Trading activity was higher as investors pulled out of the market as increase in selling orders was seen across the Kuwaiti market sectors. Total trading volume on the exchange was up by 53.55 percent, with 1.44bn shares changing hands at a total value of KD275.57mn (an increase of 53.91 percent from last week's value). High volume was seen in the Investment sector, accounting for 41.29 percent of the total traded volume this week with 593.88mn shares traded. However, the most traded stock was in the Real
Estate sector with Kuwait Real Estate Company being the most traded stock for the week with 118.92mn shares traded accounting for 8.27 percent of the total traded volume. The scrip ended the week down by 6.82 percent at KD0.082. In terms of value traded, the Investment sector took the lead as well, with a total traded value of KD80.29mn, accounting for 29.13 percent of the total market traded value. Kuwait Projects Company (Holding) was the value leader with a total traded value of KD26.16mn. The scrip cl
osed at KD0.485, which is 2.02 percent lower from last weeks' closing.

The Non-Kuwaiti sector was the only gainer for the week, adding 0.43 percent. United Gulf Bank was the biggest gainer in the sector and also made it to the top gainers list with 6.45 percent increase in its share price. All other market sector closed with negative performance. Global Services Index was the biggest loser this week, shedding 9.70 percent with the biggest Kuwaiti listed company in market capitalization, Zain being a major loser in the sector, closing down by 14.71 percent. The Investment sect
or came second, as Global Investment Index ended the week losing 5.66 percent compared to its previous weeks' value. Coast Investment & Development Company was the top loser this week, down by 24.05 percent. On the other side, Al-Madina for Finance & Investment Company topped the gainers list, adding 8.64 percent.

Looking at Global's special indices, all ended at lower note. The Global Small Cap. (Low 10) index was down by 0.35 percent while Global Large Cap (Top 10) shed a notable 7.85 percent from its value. Also Global Sharia'a compliant Islamic Index was down by 7.33 percent.

Macroeconomic news
The Central Bank of Kuwait (CBK) issued on Wednesday, October 28, three month bonds priced at KD99.7mn ($348mn) and carrying a 1.25% yield. The Central bank's bond is the second this month, following a three-month issue priced at KD99.7mn and carrying a 1.25% yield, data show. (Source: Zawya)

Kuwait is expected to post a budget surplus of KD9.75bn ($34.14bn) in its 2009/10 fiscal year if oil prices remain at around $80. Kuwait is expected to post about KD5.5bn for the next five months of the fiscal 2009/10 that ends in March. The world's fourth-largest oil exporter has assumed its crude would fetch $35 a barrel in its 2009/10 budget.

The deputy prime minister for economic affairs, Sheikh Ahmad Al-Fahad Al-Sabah, said that Kuwait plans to spend up to KD40bn ($139.9bn) on its proposed five-year development plan. The plan, which needs to be approved by the Kuwaiti parliament before implementation, aims at diversifying Kuwait away from oil, attract more investments into the Gulf Arab state, and boost the participation of the private sector in government projects. The plan, if implemented, would be the government's first since 1986.

Oil related news
The price of Kuwait crude reached $77 per barrel on Monday October 26, an increase of $1.68 per barrel from a week earlier, said Kuwait Petroleum Corporation (KPC). Oil prices, since last week, have been rising due to slump of the rate of the US dollar vis-a-vis other main hard currencies, in addition to the comeback of the speculators to the oil markets. OPEC believes that issues such as rise of speculation in the international bourses related to energy, jitters in the oil markets and prices of the crude
distinguished the summer season for the global energy sector. The Organization of Petroleum Exporting Countries (OPEC) is seeking to settle the oil price at between $70 and $80 pb to ensure balance between the interests of the producers and consumers.

Oil Minister Sheikh Ahmad Al-Abdullah Al-Sabah, said that OPEC would need to meet to discuss policy if the crude price hits $100 a barrel. OPEC would only increase output if stocks fell to 55 days of forward cover or below. Speculation and dollar weakness were driving the oil price, Sheikh Ahmad added.

China's Sinopec Group and Kuwait signed a preliminary pact to build a mega refinery and petrochemical complex in southern China's Zhanjiang city. The deal, inked also with local governments, marks another step forward for the planned $9bn venture after Beijing's order to relocate the plant due to environmental concerns.

Japan's AOC Holdings said that it would cut its contract for term crude oil supplies from Kuwait to 40,000 barrels per day (bpd) from 100,000 bpd starting in January 2010, due in part to falling demand. AOC Holdings is a holding company for Japan's Fuji Oil Ltd and oil explorer Arabian Oil.

Kuwait Petroleum Corporation (KPC) has again revised its offer for naphtha supplies lifting in December 2009-November 2010, down by $3.00 to $14.00 a ton premium to Middle East quotes on a free-on-board (FOB) basis, traders said. The newest offer is still $3-4 more than the best bids at $10.00-$11.00 a ton premium, they added.

Other local news
Kuwait singed a loan agreement with Uzbekistan worth KD4.34mn (15.62mn) to fund building and renovating irrigation and drainage networks. Kuwait Fund for Arab Economic Development (KAFED) said that the projects, to be launched in the districts of Sardarya and Jizak, are aimed at increasing agricultural production, improving living conditions of the farmers in these regions and realizing regional food security.

Kuwaiti Financial Center will sponsor the Kuwaiti financial forum due to be held early November. The corporation aims at achieving high revenues and boosting operations through assuring that its services meet demand. The center said that the forum, to be organized by a group of businessmen, in cooperation with the Central Bank of Kuwait (CBK) and the Union of Kuwait Banks, would address issues concerning the banking sector in the Arab world and would include workshops on application of modern technology in
this domain.

Warba Bank's establishing committee said that each Kuwaiti registered with the Public Authority for Civil Information (PACI) until October 4, 2009 will be granted 684 shares in the Bank. The date of the establishment general assembly will be announced soon so that the bank's establishment procedures may be completed before end of 2009.

Kuwait Stock Exchange
Global Investment House has reached a deal with its creditors to restructure and reschedule its debts. The firm, which held a meeting in the UAE with its creditors, is expected to sign the final deal before the end of November. An agreement was reached between Global and its creditors whereby Global would set up two specialized firms, a real estate one and the other an investment one that will hold Global's real estate and investment assets which will be mortgaged by Global's creditors.

Agility said it won a contract with the US Agency for International Development (USAID). Under the contract, Agility won a $4mn order to receive and store food at Jacinto port in Houston in preparation for shipment to Djibouti Free Zone. The contract includes a one-year base and four-year options, with a maximum potential value of the contract of $10mn a year Indian state-run telecoms firm Bharat Sanchar Nigam Ltd (BSNL) feels a $13.7bn price for a 46 percent stake in Kuwait's Zain is expensive. BSNL was r
eady to pay no more than $10bn for the stake, without attributing it to anyone.

Highlights of the week
Savings and Credit Bank Kuwait (SCB) approved during its Executive Board meeting a number of procedures that would facilitate housing loans for individuals. SCB said that the bank would facilitate loans for those owning private dwellings, governmental granted houses, adding that the loan facilitation would be given for citizen's living in a house of over 375 square meters space. The meeting agreed on a proposal regarding the decrease of interests rates for the SCB to two percent. The SCB also approved a de
cision on adjusting loans regulations which would allow citizens who sell their real-estates and pay of their loans to receive refunds.

Kuwait Finance House said that its provisions were declining but had set aside KD460mn ($1.6bn). KFH said in September that it did not have large exposure to the debt of local investment firms and still had a strong financial position.
Kuwait Financial Center (Markaz) is raising its exposure to real estate, focusing mainly on Syria, Saudi Arabia and Egypt, after the global market turmoil slashed the value of its assets by more than a third. Markaz's real estate portfolio made up of property in the Middle East and the United States is worth $800mn, out of $3.5bn in total assets. Assets were worth $5bn before the crisis. The firm will rely more on private placement and institutional investors and could seek a mezzanine loan to help raise c
ash. (Source: Reuters) The Emirates Securities and Commodities Authority (SCA) has approved listing of shares of Hits Telecom Holding Company in the Abu Dhabi Stock Exchange. The company said that the listing of the company's stocks in the UAE bourse would boost expansion of its interests and operations in many regional markets through broadening the basis of the shareholders.

National Bank of Kuwait (NBK) has signed an KD80mn ($279.6mn) loan agreement with Kuwait Projects Company (KIPCO). The agreement stated that the later gets a KD80mn for a period of five years to finance company projects. Earlier this month, KIPCO's Vice Chairman Faisal al-Ayyar stated that the firm will use the money from its seven-year $500mn benchmark bond to reschedule its debt. Ayyar said the firm has about $700mn of debts that mature in 2011. KIPCO, which is the country's biggest investment firm by a
ssets, owns stakes in 50 companies and operates in 21 countries.

Kuwait and Middle East Financial Investment Company (KEMEFIC) obtained the approval of the Central Bank of Kuwait (CBK) on October 28 to extend the period to repurchase a maximum of 10 percent of its issued shares for six months. The new term will start as of October 27 to April 27, 2010 subject to abiding by CBK's rules and regulations of corporate stock buyback.

Wataniya Telecom
It reported a net profit of KD97.3mn in 9M-2009, an increase of 42.7% over the same period of 2008. This significant growth in profit for 9M-2009 is mainly attributable to one-off gain from the reversal of provisions of KD49.9mn (net of expenses) as Wataniya won a case against the Ministry of Communications, Kuwait regarding network license fees. The same has been accounted in Q2-2009. Earnings per share (EPS) for the 9M-2009 was 194fils compared to 136fils reported in the same period of 2008. In Q3-2009,
the company's revenue declined by 5.1% to KD118.9mn over Q3-2008, while its net profit declined by 27.7% to KD18.5mn.

Arabian Cement Company announced its 9M-2009 results. Net profits witnessed a decline of 6.6% YoY in 9M-2009 to SR259.2mn while revenues decreased by 23.4% YoY to SR557.7mn in 9M-2009. On a quarterly basis, the company registered earnings of SR72.8mn (SR0.91 EPS) in 3Q-2009 which is up 1.4%YoY but down 11.9% QoQ. Revenues are down 30.0% YoY and down 14.8% QoQ.

Emirates NBD (ENBD) announced its 9M09 results, reporting a net profit of AED3,164mn (EPS: 57fils). The results exhibit decline of 14%YoY in profitability while on a quarterly basis, figures for 3Q09 increased 3%YoY and 24%QoQ. The results of the bank though seriously bogged down by high NPLs, outline an improving trajectory in the bank's core performance. In UAE - A Result Flash report on Union Cement Company. Union Cement Company announced 9M-2009 net profit of AED97.3mn (EPS: AED0.145), 4.6% increase a
s compared to AED93.1mn (EPS: AED0.139) in 9M-2008. 3Q-2009 net profit at AED10.8mn (EPS: AED0.016) was down 69.3% on y-o-y basis and 77.8% on a q-o-q basis. The reason for the increase in nine month profits is because of a major drop in cost of sales mainly due to Company bringing online multi-fuel consuming burners in its kilns, which lessened its dependence on fuel and diesel in favor of cheaper coal fuel.

RAK Ceramics Company announced 9M-2009 net profit of AED210.7mn (EPS: AED0.343), 24.4% increase as compared to AED169.4mn (EPS: AED0.276) in 9M-2008. 3Q-2009 net profit was up 28.7% on y-o-y basis and down 8.5% on a q-o-q basis at AED70.14mn (EPS: AED0.114). We expect RAK Ceramics to make great strides, going forward because of Company's determined effort to think beyond the lucrative UAE/GCC market, a very aggressive approach in entering and capturing regional and overseas markets with a focus on some of
the largest markets of the world. The company has positioned itself well in the niche segments of the market where possibility of competitor to take away their share is remote. We expect RAK Ceramics to post full year net profit of AED270.0mn (EPS: AED0.440) in 2009 as against AED206.0mn (EPS: AED0.335) in 2008, an increase of 31.1%.