Report: Divergence, profit-taking, and focus on banks after approval of mortgage finance amid stock market changes last week

Kuwait City, Sept 26 (KUNA) -- The Kuwait Stock Exchange concluded its weekly trading on Monday amid mixed performance across its main indices over five sessions, characterized by profit-taking on selected shares and a focus on the banking sector following the approval of the mortgage financing law, while speculation on stocks that had seen price increases in September continued.

The week began with a broad market decline amid selling pressure affecting most shares, creating an atmosphere of caution and anticipation among traders due to geopolitical developments and concerns over their repercussions. Trading liquidity in the first session reached approximately 91.5 million Kuwaiti dinars (about $281 million), with the First Market capturing the largest share at 52 percent, while the Main Market accounted for the remaining 48 percent.

During the session, 134 shares were traded; prices rose for 17 shares, fell for 107, and remained stable for 10. This performance was reflected in sector indices, with most weighted indices declining. The consumer goods sector led the losses with a drop of 1.5 percent, followed by the energy sector, which fell by 2.44 percent. Only two sectors saw gains: insurance, up 1.4 percent, and healthcare, up 0.06 percent.

Notably, speculators targeted small and mid-cap stocks, while selling pressure mounted on bank shares following the Central Bank of Kuwait’s decision to keep interest rates unchanged at 3.5 percent.

In the second session of the week, the stock exchange recorded trading volume worth 89.3 million dinars (about $274 million), executed through 303.3 million shares across 2,202 deals. Nine out of 13 sectors declined, led by the technology sector, which fell by 9.32 percent. Three sectors rose, headed by energy, which gained 2.81 percent, while the healthcare sector remained stable.

Trading occurred in 133 companies; 66 posted losses, 44 recorded gains, and 23 remained unchanged. The session showed rebound movements in specific stocks, recording marginal gains after losses incurred on Sunday, particularly among leading bank shares, while small and mid-cap stocks continued to achieve quick gains.

In the mid-week session, stock indices suffered broad declines amid profit-taking and selling pressure affecting most shares, especially small and mid-cap ones. Trading involved 132 shares; prices rose for 17, fell for 104, and remained stable for 11. Consequently, 11 sectors declined, led by technology, which dropped by 14.58 percent. Conversely, the telecommunications and energy sectors rose by 0.24 percent and 0.04 percent, respectively.

On Wednesday, bank shares attracted buyers' attention following the approval of the mortgage financing law for housing care beneficiaries, revitalizing all stock market indices. Trading liquidity reached 117.2 million dinars (about $359.8 million), with the First Market capturing 56 percent of the volume and the Main Market taking the remaining 44 percent. This activity occurred against a backdrop of cautious geopolitical calm in the region.

Regarding sector performance, eight sectors rose, led by technology, which gained 12.20 percent, while four sectors declined, headed by energy, which fell by 1.03 percent. The healthcare sector remained stable.

Trading involved 134 shares; prices rose for 87, fell for 34, and remained stable for 13. The market capitalization of companies gained approximately $453.8 million (about $1.3 billion), a rise of 0.86 percent, reaching a level of $52.8 billion (about $162.3 billion).

In the final weekly session, the situation did not differ significantly from the previous one, despite all indices closing in the green. Trading volume reached 87.9 million dinars (about $269.8 million), executed through 351.6 million shares across 2,399 deals. Six listed sectors rose, led by the industrial sector with a gain of 1.2 percent, while seven sectors declined, headed by technology, which fell by 1.1 percent.

The market capitalization of shares decreased during the week by approximately 0.8 percent (about 456 million dinars, equivalent to $1.3 billion), reaching 52.9 billion dinars (about $162.4 billion).

For his part, a report by Al-Shal Consultations on Saturday stated that indirect investment in the Kuwait Stock Exchange is "hot," meaning entry and exit are rapid, with exit being much faster than entry. "We believe it is important to monitor it to mitigate its consequences if its behavior changes," the report added.

It noted that Kuwait Clearing Company facilitates daily trading of these instruments in First Market-listed companies, "an appreciated effort."

The report clarified that foreigners are currently investing in 39 companies in the First Market of the Kuwait Stock Exchange, an increase of one company from the 38 companies recorded at the end of February. Their investment value at the end of February amounted to approximately 6.6 billion Kuwaiti dinars (about $20.2 billion), representing about 15.4 percent of the market capitalization of all First Market companies. This value had decreased to approximately 6.3 billion dinars (about $19.3 billion), a drop of 324 million dinars (about $499.6 million), representing a decline of 4.8 percent, or down to about 14.4 percent of the total market capitalization of First Market companies.

The report added, "It should be noted that the decline may not be absolute, meaning it may not result from selling, liquidating investments, and withdrawing liquid funds from the market, but rather mostly from a decrease in the value of their stock portfolios at a rate higher than the decline in the First Market index."

The report pointed out that the value of foreign investments in two First Market companies, National Bank of Kuwait and Kuwait Finance House, amounted to approximately 4.2 billion dinars (about $12.8 billion) at the end of February, or about 64.1 percent of their total investments in the First Market.

It added, "The value of their investments in the two banks on Wednesday, September 23, reached approximately 4.03 billion dinars (about $12.3 billion), or about 63.2 percent of their investment value, losing approximately 263 million dinars (about $807.4 million), which is lower than the total portfolio loss."

The report concluded by emphasizing that since the beginning of their indirect investment, foreigners do not appear to have acted in a manner suggesting they are risk-takers, nor does the war seem to have had a material impact on their investment movements. Their decisions appear institutional, so it is more accurate to say their investments are stable despite the dangers involved. It is necessary to monitor their behavior whenever their ownership percentages in market capitalization increase, merely to rationalize investment decisions should that behavior change. (End) M.K.A. / T.M.A.