Markaz: GCC set for a Mega IPO year led by Saudi Arabia and UAE


Kuwait Financial Centre “Markaz” recently released its Monthly Market Research report. In this report, Markaz provides a commentary on economic and market events that transpired in the GCC region for the month of February 2018.

Markaz report stated that for the GCC markets, the positive start to the year was short-lived as Oil prices went down by 4.7% to close below USD 66/bbl. The sentiments were reflected in the regional stock markets as well, with the S&P GCC Composite Index losing 2.5% during February 2018. Bahrain, followed by Kuwait was the region’s top performers gaining 1.4% and 0.5% respectively. Similarly, the global markets retreated after a strong showing in the previous month. The MSCI World index and the U.S (S&P 500) lost 4.3% and 3.9% respectively in February.

Markaz report added that while the stock markets are witnessing heightened volatility, there is good news in the form of renewed interest for IPO’s in the GCC region. The year 2017 witnessed a record 17 issues raising USD 2.95bn in capital. In 2018, Saudi Arabia and the UAE are set to lead the way for IPOs in 2018 as nearly 30 GCC companies are expected to go public.

During February 2018, GCC witnessed several interesting developments. Saudi Arabia’s cabinet has approved a new bankruptcy law, in an attempt to attract more foreign investments into the country and encourage SME growth. Though the finer details are still unknown, the revised framework is expected to strengthen the legal infrastructure for companies to confront financial difficulties efficiently. 

S&P affirmed its “AA/A-1+” long-term and short-term foreign and local currency sovereign credit ratings for Kuwait with a stable outlook for the gulf state. The stable outlook is a reflection of Kuwait’s strong public and external balance sheets backed by sizeable financial assets. S&P also projected Kuwait’s economic growth to hover around 3% annually between 2019 and 2021.

Nasdaq Dubai launched their first index based futures contracts, linked to DFM’s General Index and ADX’s main share index, the ADI. The launch of the futures is expected to help increase liquidity, attract international investments and provide a framework for hedging.

Creditors rejected the latest proposal from Dana Gas to restructure the USD 700 mn sukuk contracts that the latter refused to redeem. The company offered to redeem 10% of the sukuk in cash and roll over the rest at an annual profit of 4%. The proposal was rejected as creditors wanted more favourable terms.

Saudi Arabia is working with HSBC, JPMorgan and Mitsubishi UFJ Financial Group on refinancing its existing USD 10bn syndicated loan. The loan refinancing will include a repricing of the debt facility and a maturity extension, to 2023 from 2021.

On the oil front, OPEC is closing in on its goal of reducing oil inventories held by industrialized nations to their five-year average, the original target of a supply-cutting pact with Russia and others. The OPEC is reducing output by 1.2 million barrels per day based on the pact with Russia and other non-OPEC producers.

China is all set to foray into the crude futures market as it plans to introduce new crude based futures contract, set to trade in the Shanghai International Energy Exchange. The Yuan denominated contract is expected to be an alternative to WTI and Brent benchmarks and also aims to increase the usage of China’s currency for global trade.

About Kuwait Financial Centre “Markaz”

Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the Region with total assets under management of over KD 1.03 billion as of 31 December 2017 (USD 3.40 billion). Markaz was listed on the Boursa Kuwait in 1997.

For further information, please contact:

Alrazi Y. Al-Budaiwi
Media & Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Tel: +965 2224 8000
Fax: +965 2246 7264
Email: [email protected]