GCC markets trend upward on positive economic outlook and corporate earnings

Kuwait’s All Share Index gained 2.6% in the month of April supported by improved economic outlook and positive earnings reports. Oil prices were up by 1.3% for the month. Among sectors, Boursa Kuwait’s Telecom sector was the top gainer, rising 11.9% followed by Industrials which increased by 10.2%. Insurance sector declined the most for the month at 4.9%, followed by Energy, which declined by 3.8%. Among Premier Market stocks, Gulf Cable and Electrical Industries Company and Jazeera Airways were the top gainers during the month, rising 20.5% and 14.2% respectively. Gulf Cable and Electrical Industries Company had recorded a 188% y/y increase in its net profit for 2021. The company had also received purchase orders worth KD 15.4mn. National Bank of Kuwait and Kuwait Finance House have reported annual increase in net profit for Q1 2022 at 38% and 39% respectively.

IMF expects Kuwait’s real GDP to grow by 8.2% in 2022, the highest among GCC countries. World Bank has estimated Kuwait’s economy to grow by 5.7% in 2022 on the back of higher oil output and stronger domestic demand. Credit at Kuwait’s banks grew by 7.87% y/y in February 2022, with consumer loans increasing by 14.0% y/y.

Regionally, S&P GCC composite index rose by 2.8% for the month. GCC markets were positive for the month, except for Bahrain and Oman. Dubai and Saudi Arabia equity indices were the biggest gainers among GCC, rising 5.5% and 4.9% respectively over the month. Abu Dhabi and Qatar equity indices also marked a gain of 1.3% and 0.4% respectively over the month. Oman and Bahrain declined by 1.1% and 0.8% respectively. Among GCC blue chip companies, the best performer was International Holding Company, which gained 15.9% during the month. IMF has estimated GCC region’s economy to grow by 6.4% in 2022, with Saudi Arabia expected to grow by 7.6%. Fitch has revised Saudi Arabia’s outlook to positive from stable, citing improvement in sovereign balance sheet, higher oil prices and the country’s commitment to fiscal consolidation. Saudi Arabia’s Al Rajhi Bank, Saudi National Bank and Riyad Bank have posted increase in net profit for Q1 2022 at 24%, 32% and 15% respectively. Shares of Dubai Water and Electricity Authority (DEWA) closed 15.7% higher on its debut in Dubai stock exchange. The order book for IPO was 37 times oversubscribed. DEWA had raised USD 6.1billion, marking the largest listing in UAE and the biggest in GCC since Saudi Aramco’s IPO that raised USD 29.4billion in 2019. Moody’s has revised outlook for GCC banks to stable as economies rebound on higher oil prices.

Developed markets were mostly negative for the month with MSCI World and S&P 500 losing 8.4% and 8.8% respectively. Japan’s TOPIX lost 2.4% while UK’s FTSE gained 0.4%. U.S’ headline CPI increased by 8.5% y/y in March 2022, the highest rise since December 1981. IMF has revised downwards its growth forecast for global economy to 3.6% in 2022 citing impact of Russia-Ukraine war. It has also cautioned that inflation could remain higher for longer and new COVID-19 lockdowns in China could impact supply chain. U.S. Treasury yields were up for the month, with the benchmark 10-year note surging from 2.32% (March end) to 2.88% on the back of sustained rise in inflation and U.S Fed Chair’s indication of a possible steeper rate hike in May. U.S. Fed Chair has indicated that an interest rate increase of 50 bps could be considered in the next meeting. Oil prices were up by 1.3% for April 2022 supported by concerns of tighter supply. However, release of strategic reserves by countries and COVID-19 lockdown in China capped gains. Germany has extended support for European Union’s oil embargo on Russia, increasing the likelihood of an overall EU ban on Russian oil. OPEC has stated that it would not be possible to replace Russia’s supply of oil and other liquid exports, amounting to 7 million bpd, in the event of sanctions. IEA’s member nations plan to release 60 million barrels over the next six months. U.S would be matching that amount as part of its 180 million barrels release that it had announced in March.

Know more about the performance of GCC and Global markets in April in our recent Global & GCC Capital Markets Review. Read more