Markaz: Vaccine optimism propel GCC markets & Oil prices higher

03/12/2020

Kuwait Financial Centre “Markaz” recently released its Monthly Markets Review report for the month of November 2020. The report stated that all GCC equity markets ended the month positively as oil prices jumped by 27% for the month after pharmaceutical firms Pfizer, Moderna and AstraZeneca announced the eminent release and availability of COVID-19 vaccine, which rose investor’s hopes for a quick recovery of the global economic.

Kuwait Main Market index registered a gain of 1.6% for the month. Kuwait All Share index gained of 0.3% while the index’s P/E ratio stood at 20, a premium of 33% compared to that of the S&P GCC index.  Market liquidity in November rose by 64% over previous month, averaging a daily trade of USD 323million during November.

Among Kuwait sectors, the report indicated that investors, encouraged by signs of economic recovery, shifted their positions from defensives in favor of cyclical shares. Oil & Gas were the top gainers, rising 7%, while the Consumer Goods index saw the biggest decline, down 5.2% for the month.  Among blue chips, Kuwait Finance House gained the most at 2.7%, while Agility Public Warehousing lost 3.5% for the month. Meanwhile, MSCI included Kuwait to its Emerging Markets Index on November 30.  Seven Kuwait stocks – National Bank of Kuwait, Kuwait Finance House, Zain, Agility, Boubyan Bank, Mabanee and Gulf Bank have been added to the MSCI Emerging Market Index at an aggregate weight of 0.58%. According to Reuters, this is expected to result in at least USD 2billion of investment flow from passive funds into Boursa Kuwait.

Regionally, the S&P GCC Composite Index gained 8.2%, with all markets ending the month in positive territory. Both Saudi Arabia (Tadawul) and Dubai equity markets gained 10.6% in November followed by Abu Dhabi and Qatar, which gained 6.5% and 5.9% respectively. Saudi Arabia’s Tadawul Stock Market also became the first GCC stock market to post gains for 2020, rising by 4.3%. S&P GCC Composite Index has also recovered most of the losses for the year, and is now down by just 2.4% for the year. All GCC sectors were in the green with Healthcare index gaining the most at 11.4% for November, followed by Basic Materials with a gain of 9.8%.

Among the GCC blue chip companies, Al-Rajhi Bank (Saudi Arabia) share price rose by 13.7% in November. Saudi Aramco, the largest GCC listed company by market capitalization, rose by 6.6% for the month and is approaching a market capitalization of USD 2trillion. Other significant gainers among GCC blue chips include Industries Qatar, which rose 22% for the month, followed by Emirates NBD Bank (UAE), which gained 15.3% in November.

The performance of global equity markets was also positive, with the MSCI World Index gaining 12.7% in November. U.S. market (S&P 500) gained 10.8% in November after former Vice-President Joe Biden was projected to win the U.S Presidential Election and on hopes of an orderly transition. The U.K (FTSE 100) markets gained 12.4% for the month, and Emerging markets increased by 9.2% for the month due to the vaccine development and continued monetary easing measures by central banks in the U.S and Europe.

Oil prices closed at USD 47.6 per barrel at the end of November, posting a gain of 27% for the month. Oil markets were buoyed by favorable results in COVID-19 vaccine trials, which rose hopes of swift demand recovery for oil as governments around the world could fully reopen their economies and oil-dependent sectors like travel and tourism could make a comeback.

Markaz Monthly Markets Report