Kuwait Financial Centre “Markaz” [KSE: Markaz, Reuters: MARKZ.KW, Bloomberg: MARKAZ: KK] announced a net profit of KD 5.72 million for the three quarters ending 30th September 2013, a net profit of 12 Fils per share as compared with a net profit of KD 2.89 (6 Fils per share) during the same period in 2012. Markaz’s total assets under management (AUM) reach KD1.04 billion, with an increase of 13% compared to the AUM as of 30th September 2012.
Markaz Chairman, Mr. Diraar Y. Alghanim, said “Kuwait’s GDP is expected to grow by 4.5% in 2013 and 5% in 2014. Growth will be supported by oil prices and the State’s spending on infrastructure projects in Power, Water and Roads sectors.”
Mr. Al-Ghanim added ”As for GCC States, oil prices remained stable despite the global market's sluggish growth, in addition to GCC States’ increased production and supply from new shale oil resources. Financial markets in GCC States are expected to witness gains during the fourth quarter of 2013 backed up by stable oil prices and member states spending on infrastructure development projects.”
On the global economy, Mr. Al-Ghanim noted that: “The partial shutdown of US government borrowing, the situation in Syria and challenges being faced by emerging markets have had negative impact on growth internationally. However, it is predicted that the US economy will gain some traction in 2014 as a result of quantitative easing and low interest rates. Hence, the United States’ GDP is expected to advance to an estimate of 2.6% during the coming year. The Eurozone remains mired by the financial crisis. The European Central Bank (ECB) lowered interest rates and revised down its GDP forecast for 2013 to -0.6% but is expecting a recovery to 1.1% growth in 2014.”
Regarding the company’s activities, Mr. Manaf Alhajeri, CEO of Markaz said:
Asset Management
Mena Equities
For the third quarter of 2013, Markaz Islamic fund, focused on the Kuwait market, closed with a gain of 6.6% against an increase of 5.5% in its benchmark Al-Madar Index while our other Kuwait focused Forsa Fund, the only derivatives fund in the region posted a gain of 10.6%. MIDAF and MUMTAZ funds continue to focus on the index heavyweights and blue chip stocks, posting 7.4% and 4.5% respectively for the same period, against an increase of 8.4% on S&P Kuwait TR. Meanwhile, our MENA focused Markaz Arabian Fund gained 21.4% against a gain of 17.5% in the benchmark S&P Pan Arab Composite Index.
Markaz is currently seeking regulatory authorities’ approvals to launch Markaz MENA Islamic Fund (MMIF). This new fund seeks long-term capital growth from a diversified portfolio of equities, funds, and various financial instruments that are Shari’ah compliant including Islamic investment funds, Islamic Sukuks & bonds. The fund will focus on achieving this objective by investing principally in the MENA & GCC.
In addition, Markaz also awaits approvals from regulatory bodies for another new investment fund, Markaz Select Sector Focus Fund (SSFF). This type of investment fund is recognized as an “umbrella multi-class fund”, which has a strategy that consists of issuing and allocating the fund units within separate multiple classes, where each class of units invests in an identified economic sector. The fund's classes will be comprised of concentrated and actively managed portfolios within the identified performing sectors. This product has a distinctive advantage where the investor has the option to allocate his units in the various categories/sectors to satisfy his investment needs. The investors will also hold the benefit of deciding if they want to move from one category/sector to another within the specified time limits.
It is worth noting that Markaz recently won the “Best Asset Manager in Kuwait - 2013” award by Global Investor magazine, a Euromoney publication specialized in finance and investment. The award’s judges selected Markaz based on the company’s healthy balance sheet; the performance and diversity of its product offerings; its innovation in creating new investment products; its high level of corporate governance; and its sustainable growth in market share, assets under management and client base.
International Investments
In the first nine months of the year, Atlas Diversified Class, investing in a portfolio of multi-asset global funds, returned 3.87% outperforming its benchmark by 190 basis points. Atlas Emerging Market Thematic Class Fund, which invests in a portfolio of Emerging Markets equity funds focusing on selected themes, gained 5.20% in the quarter. Atlas ETFs Program, which allocates its assets into various Exchange Traded Funds globally, had a robust performance of 12.46% YTD, in line with its benchmark. Markaz proprietary portfolio gained 7.65% outperforming its relative strategic benchmark by a solid 540 basis points YTD.
Markaz is in the process of obtaining regulatory bodies approvals to launch a new investment fund Mawazeen International Fund (Mawazeen). This product’s aim is to achieve the maximum capital value for the fund on a long-term period by primarily subscribing in units of listed mutual funds (ETFs) and other licensed funds.
Investment Banking
Corporate Finance Advisory
Consistent with the market environment, Markaz continues to build strong capabilities in restructuring advisory services (either representing creditors or corporations), distressed debt transactions, liquidating non-core assets for our clients, and raising fresh capital [debt and/or equity] for local corporations. Markaz is currently executing on 7 advisory mandates, including: financial restructuring, corporate restructuring, buy-side advisory, valuation advisory, and cross-border M&A. Markaz is also actively bidding for a number of transaction advisory roles for the public-private partnership projects.
Fixed Income
As of September 30, 2013 the Markaz Fixed Income Fund recorded a year-to-date increase of 2.44% exceeding the HSBC/NASDAQ Dubai GCC US Dollar Index (GCCB) which recorded 1.14% for the same period. The NAV increased by 1.20% over the quarter to reach USD10.95.
Mena Real Estate
Markaz Real Estate Fund “MREF” reached a net asset size of 102m KD as of September 30th 2013 and managed a portfolio of 42 properties. MREF is progressing with developing its land plots in Dasman and Bneid El Gar. Financially, the fund continued to make steady monthly cash distributions to investors, and generating a total return of 9% for the period. Meanwhile, Markaz Real Estate Opportunities Fund is managing its investments in Lebanon, Jordan, Syria and Abu Dhabi.
KSA Villas Development in Al Khobar KSA is progressing with the project reaching the final finishing stage. Up to end of Q3 2013 we have sold 46 out of 54 villas and expect to complete the sale of villas by Q4 2013.
KSA Residential Development Markaz acquired a plot in Al Khobar Rawabi neighborhood and hired a design consultant with the aim to develop it into a residential apartment complex for rental targeting expatriates living in KSA. The development is in the permitting phase with the preliminary permit secured. The development aims to generate gross returns in the tune of 20%.
Markaz is also awaiting regulatory bodies’ approvals to launch Markaz Gulf Real Estate Fund (MGREF). This real estate fund’s main purpose is to invest in potential opportunities throughout the GCC region including Kuwait. MGREF’s plans are to diversify their position from acquiring promising land to property under development, in addition to income generating/non-generating real estate. It also aims to achieve capital gains and make distributions to the investors on a quarterly basis.
International Real Estate
Markaz is pro-actively managing its portfolio with a view to stabilizing assets and subsequently liquidating stabilized assets at premium prices. Markaz has also been pursuing new opportunities including selective development projects in growth markets. During the third quarter of 2013:
- Markaz is in the process of selling three properties from our distressed debt portfolio, as they have reached stabilized occupancy levels and values. Markaz is also in the process of marketing for sale one of the apartment projects from our multifamily fund.
- Markaz is making good progress on the development of our two office development projects in Dallas, Texas.
- Markaz is also achieving good progress in developing a residential development project in Istanbul, Turkey.
Photo caption: Mr. Diraar Y. Alghanim, Chairman, Kuwait Financial Centre, Markaz
About Kuwait Financial Centre “Markaz”
Kuwait Financial Centre K.P.S.C “Markaz”, with total assets under management of over KD 1.04 billion as of June 30, 2013, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.