GCC Stock Markets – Positive earnings growth strengthen business optimism

According to our recently released Monthly Market Review for the month of August, GCC equity market gained by 3.6%. At country level, all GCC markets except Oman registered gains for the month. Globally, equities continued their bullish rally as indicated by the MSCI World Index which gained by 2.3%, extending YTD gains of 16.8%. MSCI EM Index gained towards the month-end recuperating from its mid-month weakness. U.S and U.K were also positive for the month.

GCC Markets: Most markets end the month in green
Kuwait equity market sustained its upward momentum in August 2021. Kuwait All Share index rose 3.1% for the month and 22.4% for the year. Market liquidity in August, as indicated by the average daily traded value, stood at about USD 201 million, an increase of 29% compared to the previous month. The price to earnings ratio (P/E) stood at 20.9.

Among Kuwait sectors, Consumer Goods was the top gainer, rising 5.3% followed by Banks at 4.0%, while Consumer Services and Oil and Gas declined by 4.1% and 3.8% respectively for the month. Among blue chips, Kuwait Finance House was the top gainer for the month of August, gaining 5.2%, while Boubyan Bank lost 2.1%. Kuwait Finance House has posted a net profit of KD 52 million for Q2 2021, nearly thrice that of Q2 2020, owing to decline in provisions. It also plans to finance projects in Saudi Arabia, including the NEOM business zone.

S&P GCC composite index gained 3.6% in August. All GCC markets, except Oman, were positive for the month. Abu Dhabi and Dubai were top gainers for the month, each increasing by 5.0%. Saudi Arabia, Qatar and Bahrain gained 2.8%, 3.2% and 3.0% respectively in August. Oman declined by 1.6% for the month. While factors such as strong earnings season in the region and increase in foreign ownership limits of major banks by Qatar supported the markets, low oil prices and global spread of COVID-19 Delta variant stunted gains.

Among the GCC blue chip companies, International Holdings Company (IHC) continued its winning streak, gaining 10.9% for the month and 250% for the year. The company’s net profit has increased by 309% in Q2 2021 to AED 2.87 billion due to strategic acquisitions. It has completed the listing of its subsidiary, Al Seer Marine, the sixth IHC subsidiary to be listed in less than eight months.

Global Markets: Bull run continues
The performance of global equity markets was positive, with the MSCI World Index closing 2.3% higher in August. U.S. market (S&P 500) gained 2.9% for the month supported by a strong earnings season, U.S Fed Chair’s accommodative stance and U.S FDA’s full approval of Pfizer-BioNTech vaccine. MSCI Emerging Index increased 2.4% for the month, gaining towards month end as countries such as China eased COVID-19 restrictions that had been in place earlier in the month. U.K’s FTSE 100 gained 1.2% in August.

Oil prices closed at USD 73.0 per barrel at the end of August, declining by 4.4% for the month. Oil prices exhibited high volatility where it reached a low of USD 65.2 per barrel, weighed down by concerns on the spread of COVID-19 Delta variant before bouncing back. U.S President Joe Biden’s administration has urged the OPEC+ to increase its output to keep a check on the increase in gasoline prices, so as to aid global recovery.

Global Market Trends – August 2021

Source: Refinitv