JEDDAH, 4 April 2005 — Kuwait’s main share index edged up yesterday to top 8,000 points for the first time in its history amid a renewed surge in world oil prices and expectations of companies reporting strong first-quarter profits.
The Kuwait Stock Exchange index grouping 130 Kuwaiti and foreign companies closed up 42.50 points, or 0.53 percent, to finish at 8,025.30, having made a session high of 8,036 and taking the index to a 25 percent gain so far this year.
The market surged 34 percent in 2004 and 101 percent in 2003, buoyed by several factors, among them lofty oil prices which in New York hit a record near $58 per barrel on Friday.
The market watcher Al-Shall’s economic report published by newspapers on Saturday said a total of 119 listed Kuwaiti companies so far have logged an aggregate 15.7 percent rise in net profits for 2004 to about 1.63 billion dinars ($5.6 billion).
Investors are now betting on strong profits and payouts from listed companies for the first quarter of 2005, analysts say.
About 40 stocks rose for 34 that fell on the second-largest bourse in the Arab world yesterday while trade volumes increased to 269.2 million shares from Saturday’s 157.9 million.
Leading yesterday’s gainer was Aayan Leasing and Investment Co., up 50 fils, or 8.33 percent, at 650 fils after company officials told the general assembly meeting on Saturday that the firm had a very strong financial showing in 2004.
They said Aayan is looking at many projects, won approval for an Islamic bond issue for 30 million dinars ($103 million), and increased net profits 13 percent in 2004, operating revenues 37 percent, assets by 39 percent and shareholders equity by 71 percent.
Mobile Telecom Co. eased 1 percent to 3.940 dinars, having surged since it announced on March 29 it was buying for $3.3 billion privately-held Dutch firm Celtel, which has operations throughout sub-Saharan Africa.
Aref Investment Group added 2.56 percent to 400 fils.
Kuwait Finance House surged 5.19 percent to 1.620 dinars. The bourse announced the Islamic bank achieved a profit of 11 million dinars, to be accounted for in the second quarter, from selling properties. United Poultry moved up 0.88 percent to 230 fils after it won a contract to supply the army.
Meanwhile, according to a report prepared by the Kuwait-based Global Investment House (GIH) Kuwaiti stocks soared in March as bullish sentiments, favorable economic news and a steady flow of corporate news emboldened investors to do some buying. In fact, March shaped up to be a record-breaking month for Kuwaiti equities, advancing by 13.4 percent, which is only the third time since 1993 the market has registered a double-digit monthly gain.
Other than the insurance stocks, the market moved only upward. Food and real estate sector shares made most of the fairly rampant mood, closely followed by rampant gains in investment and services sector stocks. Food stocks rallied round promises of higher returns and sustained profit growth for 2005 and the sector climbed 27.15 percent.
The GIH report said that food stocks were in the limelight throughout March. While food stocks are considered to be havens in risky stock markets and uncertain economies, due to the fact that people have to eat, 2004’s performance of food stocks at the KSE was not satisfactory. Affected mainly by a sharp fall in overall profitability during much of 2004, investors severely punished food stocks. But in 2005, food stocks in general are both more risky and more potentially rewarding now than they’ve been in other periods. While the sector seems to be on the brink of a resurgence and marked improvement in bottom-lines, they are now excessively priced, trading at an average P/E of 241.6X compared to a market P/E of 16.0X. Within, Livestock Transport and Trading Co. trades at around 289.3X its 2004 earnings while United Poultry is trading at 83.2X and United Fisheries stands at a P/E of 62.7X.
Livestock Transport and Trading Co. rose 45.3 percent after announcing that its 2004 earnings broke even, in comparison to a loss of KD1.19 million in 2003.
Elsewhere, United Fisheries of Kuwait Co. climbed 40 percent as investors held an equally bullish outlook for the company. This comes despite last month’s announcement of a 75 percent drop in profits for 2004.
The upbeat mood of investors helped strengthen trading activity ahead of 1Q earnings releases. Both the volume and value of shares traded picked up considerably, revisiting record levels of 2003. The volume of shares traded reached 5.77 billion shares, while the value shares traded soared to KD3.1 billion, averaging a daily value of KD138.9 million, as compared to a daily average of KD53.1 million for the first two months of the year. Breadth heavily favored advancers 79 to 41, although a large number of declining stocks ended lower on account of technical adjustments post-dividend distributions instead of sell-offs. — With input from agencies
