Markaz: S&P GCC Composite Index fell by 2.3% during November 2017 despite the oil price rebound


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 MENA region for the month of November 2017.

Markaz report stated that during November 2017, oil prices rebounded by 3.6% to close above USD 60/bbl, an event that failed to cheer the regional stock markets. The broader S&P GCC Composite Index fell by 2.3% during November 2017, in-line with most of the GCC markets which declined.

Kuwait’s USD 125 Billion “Gold City”

The Ministry of Commerce and Industry asked Kuwait Municipality to allocate a plot to build a special ‘Gold and Jewellery City’ worth USD 112.5bn. Kuwait is looking to tap into the huge market in the Middle East for Gold and Jewellery, through this initiative.

Entry of smaller foreign funds in Saudi stock market

In a bid to attract more investors and as part of series of steps in the past two years to modernise the market, Saudi plans to ease the requirements for foreign institutional investors. In the latest set of reforms, CMA has proposed the minimum value of assets under management needed for an institution to qualify as an investor would fall to USD 500 million from USD 1 billion. A larger presence of foreign institutional investors makes the exchange an attractive exclusive venue for the listing of the Aramco.

Dubai growth to outperform GCC countries

According to IIF, Dubai’s GDP growth is expected to accelerate from 2.9% in 2016 to 3.2% in 2017 and 3.5% in 2018. Infrastructure investments are aiding Dubai’s economic growth projectile and additional spending related to Expo 2020 is expected to act as stimulus to the Dubai economy.

Payment settlement rush in UAE Construction industry, triggered by VAT

The UAE construction industry is facing a rush to pay off the invoices, the project owners and contractors aimed to clear their outstanding prior to January 2018, when VAT comes into effect. As post the VAT roll-out all payments would attract 5% tax on retrospective basis.

Omantel completes acquisition of Zain shares

Omantel completed the acquisition of 12.1% stake in Zain, making it the third largest telecom group in the MENA region, with 52 million subscribers. Omantel now owns around 21.9% stake in Zain, which is worth USD 2.19billion.

Oman’s Rating Downgrade

In early November, S&P downgraded Oman’s long-term foreign and local credit rating to BB from BB+, largely on the concerns of rising international debt. S&P has downgraded Oman for the second time in 2017, plunging Oman two notches below the investment grade into the junk territory.

Bahrain’s Ratings to B+ from BB

S&P Ratings lowered Bahrain’s long-term foreign and local currency sovereign credit ratings on Bahrain to ‘B+’ from ‘BB-'. The downgrade reflected Bahrain’s weak external liquidity and increasing financial risk due to more limited access to international capital market financing.

Oil Market Review

Oil price gained 3.6% for the month and ended the month above USD 64/bbl, as signs of glut appear to diminish. S&P Global rating raised its Brent oil price forecast by 10% to 55 per barrel for 2018, amid expectations of growing crude oil demand and that Opec and other producers will continue to cut production beyond March. Moreover, uncertainty over a possible extension of output cuts by major crude producers and expectations of higher supply diminished post the OPEC meeting on November 30th. OPEC and non-OPEC producers led by Russia have agreed to extend the oil production cut by 9 months, until the end of 2018. Contrary to the previous meetings, a conciliatory tone was adopted by OPEC towards shale producers. The OPEC’s confidence towards, U.S. shale producers’ inability to match its clout especially with the global appetite currently growing by some 1.5 million barrels per day (bpd) appears to be the reason for the change in tone.“

About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre K.P.S.C “Markaz”, established in 1974, is one of the leading asset management and investment banking institutions in the Arabian Gulf Region with total assets under management (AUM) of KD 1,020 million as of September 30, 2017. Markaz shares are listed on Boursa Kuwait since 1997.

For further information, please contact:

Alrazi Y. Albudaiwi
Media & Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Tel: +965 2224 8000 ext 1800
Email: [email protected]