KUWAIT, 5 June 2005 — Kuwait’s share index posted its biggest one-day percentage gain in more than 6 years yesterday, after news a local company has secured a Pentagon deal worth up to $14 billion.
The Kuwait Stock Exchange index surged 331.50 points, or 3.95 percent, to end the session at 8,714. It was the biggest one-day percentage gain for the index since it rose 4.06 percent on Nov. 24, 1998.
The jump followed news earlier yesterday that Kuwait’s Public Warehousing Co. (PWC) won its second giant contract this year.
PWC shares rose 100 fils, or 2.96 percent, to 3.480 dinars.
But only 2,000 PWC shares changed hands compared with an average daily volume of 2.3 million shares, as virtually no sellers were to be found. Volumes were also tiny on PWC affiliated stocks such as supermarket chain Sultan Center Food, which rose 6.33 percent to 1.680 dinars.
“PWC is owned by several other listed companies so if its shares go higher, the shares of the others also go up,” said Naser Al-Nafisi, who heads al-Joman Center for Economic Consultancy. Among those, Bayan Investment Co. gained 9.62 percent to 1.140 dinars, National Real Estate added 7.69 percent to 1.400 dinars, Union Real Estate, up 7.04 percent to 380 fils and Kuwait Lebanese Real Estate Co., up 5.81 percent to 910 fils.
Public Warehousing and its affiliated stocks soared in mid-February following news in mid-February that the logistics giant had won a $3.27 billion Pentagon deal.
PWC peaked at 6.850 dinars April 18 but fell to as low as 3.080 dinars May 31 and the others also corrected sharply as confidence began to get shaken as no news of any fresh deals had emerged. “The contract renews optimism in the Kuwaiti economy. It is something that boosts investors’ hopes for more projects,” Nafisi told Reuters. “The optimism makes those shares that are undervalued go up.”
Nafisi said he expected the market will continue to rise but added the bounce won’t be similar to Saturday’s. “It is like a ball thrown from up high. The first bounce is highest,” he said.
In other news, Kuwait and Gulf Link Co. added 5.05 percent to 2.080 dinars. A shareholders meeting on Wednesday approved a plan to raise its $36 million capital by 15 percent by issuing 18.8 million new shares.
Shuaa Capital rose 4.2 percent to 1.460 dinar. Shareholders yesterday discuss hiking capital by 37 percent by issuing 120.5 million new shares and a meeting Monday discusses a proposed distribution of a cash dividend and bonus shares.
The value of trading yesterday was 105.5 million dinars ($361 million) up on last week’s daily average of $310 million. The daily average in 2004 was $208.8 million.
The market has a capitalization of around $97 billion and lists 136 Kuwaiti and foreign firms.
Kuwait’s market index is up 36 percent so far this year. It rose 101 percent in 2003 and 34 percent in 2004 on high oil prices, record corporate profits and low interest rates.
