Kuwait City: Late selling drags Kuwait’s index to a lower close as a post-election bounce proves short-lived, with sceptical investors waiting for the government to reveal firm plans on long-stalled plans to develop the non-oil economy.
Kuwaitis voted in a new parliament on Saturday that may prove to be more government-friendly after the opposition refused to stand in the election.
The share index slips 0.03 per cent to 5,942 points, trimming its gains since early November’s eight-year low to 5.2 per cent after hitting an intraday high of 6,004.
“We came into work today thinking the market would be positive, but we were quickly reminded that it’s still a retail-dominated, lacklustre market — investors are cautious and any trigger can send it lower,” says a Kuwait-based trader who declined to be identified.
“Some retail investors were trying to create some positive momentum to get other investors to come in — it didn’t look like there was any government money in the market, otherwise we would have seen more movement in the bigger names.”
Stocks rallied from the November low as a government fund bought bluechip stocks, leading retail investors to do likewise, but the latter are now cashing in some of these gains.
National Bank of Kuwait falls 1 per cent, while telecom operators Zain and Wataniya drop 2.4 and 0.9 per cent. On Sunday, Zain said it had appointed a former Wataniya chief executive as its new CEO.
“I do see more positivity around the corner if the government does something concrete in terms of starting new development projects, but words are not enough — investors have heard enough promises, they want to see some actual agreements signed,” says the trader.
Long-term slump
In 2010, Kuwaiti newspapers reported government plans for a 30 billion dinars (Dh391 billion, $106.50 billion) development plan, but little has happened since, sending stocks into a long-term slump.
Small cap stocks dominate Sunday’s trade. These are volatile and so offer retail investors the prospect of quick gains.
National Ranges Co accounts for nearly a quarter of all shares changing hands, ending 4.6 per cent lower after trading in a 9.5 per cent range.
Qatar’s benchmark drops 0.5 per cent to 8,359 points to a four-month low.
“Qatar is going through a minor pullback — the trend is down,” NBK Capital writes in a note.
Vodafone Qatar and Qatar National Bank are among the biggest drags, falling 1.3 and 0.4 per cent respectively.
Oman’s measure ends 0.4 per cent higher at 5,556 points, easing away from Tuesday’s two-month low. The Muscat bourse was closed on Wednesday and Thursday for a public holiday.
HSBC Oman Bank is the main support, rising 1.9 per cent, while telecom operators Omantel and Nawras each add 0.6 per cent.
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0835 — Egypt’s benchmark index rebounds after President Mohammad Mursi called a December 15 referendum on a new constitution, hoping to end protests over a decree expanding his powers.
The benchmark, which fell 11.6 per cent last week following Mursi’s decree, climbs 2.5 per cent to 4,925 points.
Property-related stock lead gains. Market heavyweight Orascom Construction rises 5.8 per cent, Palm Hills Development adds 3.7 per cent and Talaat Mustafa climbs 3.1 per cent.
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0812 GMT — Banks weigh as Saudi Arabia’s index falls in early trade after failing to hold above a psychologically-important resistance level, spurring investors to book some of the previous day’s gains.
The benchmark falls 0.3 per cent to 6,669 points, having hit an intraday high of 6,704 points. It rose 2.4 per cent on Saturday, its largest gain since mid-April.
Failing to hold above 6,700 provides a trigger for investors to book gains, with Samba Financial Group and Riyad Bank each falling 0.4 per cent.
The bank index is down 18.6 per cent from April’s three-and-a-half year high after sector earnings proved disappointing for investors.
Saudi shares surged on Saturday, the first day Of trading since King Abdullah appeared on state television on Wednesday, soothing fears about the monarch’s health. The king, who is in his late 80s, had undergone an 11-hour back operation on November 17.
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0717 GMT — Small-cap stocks lift Kuwait’s index to a six-week high, with retail investors more confident the government will follow through on plans to develop the economy following Saturday’s parliamentary elections.
The vote proved divisive, with opponents urging people to shun the ballot box in protest at a rule change they say will skew the outcome in favour of pro-government candidates.
But equity investors hope a more pro-government parliament will be positive for Kuwait’s economy and can help kick-start a long-stalled 30 billion dinars ($106.50 billion) development plan.
Abyaar Real Estate climbs 2.5 per cent, National Ranges rises 2.3 per cent and International Finance Co adds 5.6 per cent.
This trio account for more than a third of all shares traded despite having a combined market value of less than $500 million (Dh1.8 billion) — retail investors target these stocks because these names have a relatively small free float and so can be more easily moved than bluechips.
“It’s a signal that retail investors have more confidence in the market,” says Fouad Darwish, head of brokerage at Global Investment House.
“Retailers believe the government will now pursue long due infrastructure projects. The market should continue going up, although whenever there’s a rally for a day or two people will try to take profits here and there. Overall sentiment is positive.”
The index climbs 0.8 per cent to 5,990 points, hitting its highest intraday level since October 16.
The benchmark is up 6 per cent since November 4’s eight-year low, rebounding as state-owned National Portfolio Fund bought bluechip stocks.
Retail investors followed suit and are now cashing in some of these gains to reinvest in smaller cap stocks, Darwish adds.
Qatar’s index drops 0.08 per cent to 8,393 points.
Oman’s measure climbs 0.2 per cent to 5,544 points, easing away from Tuesday’s two-month low.
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0545 GMT — Gulf Arab markets are seen rising on Sunday as gains in Saudi Arabia a day earlier boost regional sentiment, but political upheaval in Egypt could weigh on the Cairo bourse.
Saudi Arabia’s index rose 2.4 per cent on Saturday, its largest gain since mid-April and up for a second session since November 27’s 10-month low.
The benchmark had made a sustained slump following lacklustre third-quarter earnings, worries over the Saudi king’s health and political turmoil in Egypt.
But oil price gains — November was crude’s first monthly rise since August — and the king’s appearance on state television on Wednesday has helped convince equity investors to buy back into local shares.
“The fundamentals of the Saudi market are very strong and I think the rebound will continue,” says Adel Nasr, United Securities brokerage manager in Muscat.
“Oman, Kuwait and Bahrain will continue to be quiet — in Oman, we’re expecting the market to improve after struggling for the past 10-12 sessions but there aren’t any drivers for the market.”
Egypt’s index fell 11.6 per cent last week after President Mohammad Mursi issued a decree expanding his powers. On Saturday, Mursi called a December 15 referendum on a new constitution, hoping to end protests over the decree, as at least 200,000 of his Islamist supporters rallied in Cairo on Saturday.
