JEDDAH, 7 June 2006 — The market capitalization of the Kuwait Stock Exchange reached KD38.22 billion in May, down 1.95 percent compared to the previous month. Kuwait Stock Exchange Price Index once again dropped below the psychological 10,000-point mark in May. The index ended the month at 9,920.7 points, reporting a monthly drop of 3.07 percent.
The Kuwait stock index, however, closed yesterday at 10,232 points, up 0.51 percent from Monday’s closing.
The benchmark Global General Index registered a monthly loss of 4.53 percent to end the month at 277.7 points. The market recovered some ground in the last week of the month to offset some of the losses registered during the month. The market cap weighted index reported overall YTD loss of 13.28 percent at the end of May.
The earnings of Kuwaiti companies dropped 31.1 percent in the first quarter of this year (136 companies whose results were available till May 31) as compared to the corresponding period of the previous year. Banking and services sectors have been among the sectors that produced positive earnings growth for the first quarter, where as all the remaining sectors have shown disappointing performances. This drop in the earnings by various sectors could be directly linked to the drop in capital markets, especially the investment and real estate sectors that have witnessed steep decline in earnings in first quarter, according to a report by the Kuwait-based Global Investment House (Global).
The broad-based selling sentiments were accompanied by subdued trading activity during the month. The volume of shares traded saw a substantial drop of 21.5 percent as compared to the previous month amounting to 3.07 billion shares. On the other hand, value of shares traded also witnessed a sharp drop of 22.3 percent as compared to the previous month, aggregating to KD1.29 billion.
The banking sector has hogged the limelight so far in 2006, and is the only sector to report YTD gains of 5.76 percent, the Global report said. This can be attributed to the strong performance shown by the banking sector in the first quarter, reporting an aggregate earning of 35.1 percent. Recent entrant in the KSE, Boubyan Bank led the market both in terms of volume and value in May. It was listed during the month of May as the second Islamic bank under the banking sector.
In other corporate news, Al-Ahli Bank of Kuwait (ABK) and Commercial Bank of Kuwait (CBK) sold their stakes in Bank of Bahrain and Kuwait (BBK) for a combined price of KD33.47 million ($115.2 million). Kuwait Investment Company (KIC) also sold its stake in BBK, about 24 million shares for KD12.3 million.
The real estate index saw a monthly decline of 1.44 percent. The sector has witnessed consolidation activity during the month of May. Firstly, Al Mazaya Holding Company acquired a 51 percent stake in First Dubai Real Estate Company. Mazaya will raise its capital through a rights issue, and the proceeds of the issue will be used to fund the acquisition deal. Despite the positive news flow, the stock price of Mazaya declined marginally by 1.9 percent to reach 510 fils. On the other hand, Grand Real Estate Projects acquired a 90.16 percent stake in Kuwaiti Lebanese Real Estate Development Company. Grand will also boost Kuwait Lebanese capital to KD100 million ($344 million) by July 2006. However, the stock price of Grand gained 20.5 percent to reach 530 fils and the stock price of Kuwait Lebanese increased 47.2 percent during the month.
The strong sell-off can be seen from the fact that only 35 stocks out of 168 listed stocks reported monthly gains, where as 110 stocks declined, while prices of 23 stocks remained unchanged during the month. The other gainers during the month were National Ranges Company (+30.3 percent) and International Finance Company (+23.9 percent). The biggest losers during the month were Egypt Kuwait Holding Company (-37.8 percent), National Industries Group (Holding) (-30.5 percent), and Coast Investment & Development Company (-26.9 percent).
The market added five new companies in May. Boubyan Bank was listed under the banking sector, Al-Alamiah Technology Group and Mushrif Trading Co. under the service sector, while Tamdeen Investment Co. and Al-Noor Financial Investment Company under the investment sector. So far, 10 new companies have been added to the market in 2006, which has increased the total number of listed companies to 168.