Markaz: GCC markets positive on multi-year high oil prices and strong earnings

Kuwait Financial Centre “Markaz” recently released its Monthly Market Review report for the month of October 2021. Markaz report noted that Kuwait’s equity market had registered gains for the eighth consecutive month, supported by rise in oil prices, easing restrictions and positive earnings. Kuwait All Share index was the top gainer among GCC markets during October, rising 3.5% and extending its yearly gains to 28.2%.

Among sectors, Boursa Kuwait’s Consumer Discretionary sector was the top gainer, rising 13.1% followed by Financial Services at 9.1%. Utilities sector index declined, falling 1.0% for the month. Boursa Kuwait’s banking sector index was up by 2.8% in October. Among Premier Market stocks, Boursa Kuwait and Kuwait Real Estate Company were the top gainers during the month, rising 15.4% and 14.5% respectively. Kuwait Finance House and National Bank of Kuwait released their Q3 earnings, with their 9M 2021 profits surging 51% and 66% YoY respectively.

Kuwait has lifted COVID-19 related precautionary restrictions from October 24, 2021. During the month, it also reported its lowest daily infection rate since the onset of the pandemic. According to Kuwait’s oil minister, the country has begun to increase its crude production in line with OPEC+ agreement.

Regionally, S&P GCC composite index rose by 2.3% for the month, strengthened by positive earnings and sustained increase in oil prices. All GCC markets gained for the month. After Kuwait, Oman and Qatar were the biggest gainers among GCC, rising 3.4% and 2.4% respectively, while Dubai gained the least at 0.7%. Bahrain, Abu Dhabi and Saudi Arabia gained 2.2%, 2.2% and 1.8% respectively. Among the GCC blue chip companies, the best performer was Al Rajhi Bank, which gained 13.4% during the month, followed by UAE’s Emirates Telecommunications, which gained 6.6%

IMF has forecasted a brighter economic outlook for GCC on higher oil prices, gradual easing of production cuts and wider vaccine rollouts, with the region’s GDP expected to grow by 4.2% in 2022. A Reuters Poll of economists and IIF’s estimates also project an optimistic 2022 for GCC’s economic growth.

Global equity markets ended the month in positive territory supported by strong corporate earnings. The MSCI World and S&P 500 (U.S.) indices gained 5.6% and 6.9%, respectively for the month. Japan (TOPIX) lost 1.4% in October as the country’s new leader had indicated an increase in capital gains tax, which was perceived to be a reversal of its pro-investment stance. FAANG Stocks were positive for October, with the exception of Facebook, which had dropped by 4.7% due to a miss in terms of Q3 revenue against estimates and a six-hour long global service outage during the month. Emerging market stocks gained 0.9% in October. China declined for the month as slower than expected economic growth in Q3 2021 and inability of some real estate companies to meet debt repayments weighed the markets.

Oil prices closed at USD 84.4 per barrel at the end of the month on expectation of higher natural gas prices encouraging a switch to oil and continued relaxation of travel restrictions. Supply is also expected to be tighter with Saudi Arabia’s oil minister dismissing calls for a steeper increase in output. IEA expects current energy crunch to boost oil demand by 500,000 bpd. It estimates the resulting supply gap to be at 700,000 bpd until OPEC+ increases supply as planned in January 2022.

Regional Market Trends – October 2021

Source: Refinitiv

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