Kuwait Stock Exchange closes a volatile week; banks lead the scene after approval of real estate financing
The Kuwait Stock Exchange concluded its weekly trading session on the day before yesterday with mixed performance across its main indices over five trading sessions. This was amid profit-taking in selected stocks and a focus on banking shares following the approval of the Real Estate Financing Law, while speculative activity continued in stocks that had experienced price gains during September.
The exchange began the week’s sessions with a broad-based decline amid selling pressure on most stocks, fostering a cautious and wait-and-see attitude among traders due to geopolitical developments and concerns over their repercussions.
Liquidity in the first session reached approximately 91.5 million 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.
In that session, 134 stocks were traded, with 17 stocks rising, 107 falling, and 10 remaining unchanged. This trend was reflected in sector performance, as most weighted indices declined, led by the Consumer Goods sector, which fell 1.5 percent, and the Energy sector, which dropped 2.44 percent. Only two sectors posted gains: Insurance, up 1.4 percent, and Healthcare, up 0.06 percent.
It was evident during trading that speculators targeted small- and mid-cap stocks and exerted pressure on banking shares after the Central Bank of Kuwait decided to keep interest rates unchanged at 3.5 percent.
In the second session of the week, the exchange recorded trading volume of 89.3 million dinars (about $274 million) through 303.3 million shares via 2,202 transactions. Nine out of 13 sectors declined, led by the Technology sector, which fell 9.32 percent. Three sectors rose, led by the Energy sector, which gained 2.81 percent, while the Healthcare sector remained stable.
The session also saw trading in 133 companies, with 66 losing value, 44 gaining, and 23 remaining unchanged. It was clear from the session’s dynamics that rebound moves occurred in specific stocks, posting marginal gains after the losses incurred in Sunday’s session, particularly in some leading banking stocks, while small- and mid-cap stocks continued to post rapid gains.
Meanwhile, 132 stocks were traded, with 17 rising, 104 falling, and 11 remaining unchanged. As a result, 11 sectors declined, led by Technology, which dropped 14.58 percent, while the Telecommunications and Energy sectors rose by 0.24 percent and 0.04 percent, respectively.
In Wednesday’s session, banking stocks attracted buying interest following the approval of the Real Estate Financing Law for housing care beneficiaries, boosting all exchange indices. Liquidity reached 117.2 million dinars (about $359.8 million), with the First Market capturing the largest share at 56 percent and the Main Market accounting for the remaining 44 percent, amid a cautious geopolitical calm in the region.
Regarding sector performance in that session, eight sectors rose, led by Technology, which gained 12.20 percent. Four sectors declined, led by Energy, which fell 1.03 percent, while the Healthcare sector remained stable.
The session saw trading in 134 stocks, with prices rising for 87 stocks, falling for 34, and remaining unchanged for 13. The market capitalization of listed companies gained approximately 453.8 million dinars (about $1.3 billion), a 0.86 percent increase, bringing the total to 52.8 billion dinars (approximately $162.3 billion).
In the weekly closing session, the situation did not differ significantly from the previous session, despite all indices closing in the green. Trading volume reached 87.9 million dinars (approximately $269.8 million) through 351.6 million shares via 2,398 transactions. Among the listed sectors, six rose, led by the industrial sector with a 1.2 percent gain, while seven declined, headed by the technology sector with a 1.1 percent drop.
The market capitalization of stocks decreased by approximately 0.8 percent (about 456 million dinars, equivalent to $1.3 billion) during the week’s trading, bringing the total to 52.9 billion dinars (approximately $162.4 billion).
In a report released on Saturday, Al-Shal for Consultancy stated that indirect investment in the Kuwait Stock Exchange is “hot,” meaning entry and exit are rapid, with exits occurring much faster than entries. “We believe that monitoring such activity to mitigate its consequences, should its behavior change, is important,” the report added.
The report further noted that Kuwait Clearing House facilitates daily trading in First Market companies listed on the Kuwait Stock Exchange, describing this as “a commendable effort.”
It clarified that foreign investors currently hold stakes in 39 First Market companies, an increase of one company from the 38 in which they had invested as of the end of February.
The report stated that the value of foreign investments at the end of February was approximately 6.6 billion dinars (about $20.2 billion), representing roughly 15.4 percent of the total market capitalization of all First Market companies. This value subsequently declined to approximately 6.3 billion dinars (about $19.3 billion), a decrease of about 324 million dinars (approximately $499.6 million), or 4.8 percent, bringing the share to about 14.4 percent of the total market capitalization of First Market companies.
The report added, “It must be noted that this decline may not be absolute; it may not result from selling and liquidating investments or withdrawing liquid funds from the market. Rather, in most cases, it stems from a decline in the value of their equity portfolios at a rate higher than the decline in the First Market index.”
The report indicated that foreign investments in two First Market companies—National Bank of Kuwait and Kuwait Finance House—stood at approximately 4.2 billion dinars (about $12.8 billion) at the end of February, representing roughly 64.1 percent of their total investments in the First Market.
It added, “As of Wednesday, September 23, the value of their investments in these two banks was approximately 4.03 billion dinars (about $12.3 billion), or about 63.2 percent of their total investments, reflecting a loss of approximately 263 million dinars (about $807.4 million), which is lower than the loss in the value of their overall portfolio.”
The report concluded by emphasizing that since the beginning of their indirect investments, foreign investors do not appear to have acted as risk-takers, nor does the war seem to have had a material impact on their investment movements. Rather, their decisions appear institutional. Therefore, it is more accurate to say that their investments remain stable despite the severity of recent events. However, their behavior must be monitored as their ownership stakes in market capitalization increase, solely to rationalize investment decisions should such behavior change.
