Kuwait City, Mar 19: Kuwait Financial Centre “Markaz” held its ordinary General Assembly meeting on Tuesday, 19 March 2024, with a (75%) attendance. The assembly approved all items of the agenda, including the Board of Directors’ recommendation to distribute cash dividends of 6% per nominal value of the share or 6 fils per share.

In 2023, Markaz recorded Total Revenues of KD 26.32 million, a growth of 40.0% from KD 18.80 million in the previous year. The company delivered a Net Profits attributable for shareholders of KD 4.15 million, with Earnings Per Share of 8 fils, compared to KD 2.86 million in the previous year, with Earnings Per Share of 6 fils. Markaz's Assets under Management (AUM) increased by 5.03% since December 2022, reaching KD 1.21 billion.

Commenting on the results, Markaz’s Chairman, Mr. Diraar Yusuf Alghanim said: “Throughout the year 2023, the GCC Economies witnessed huge development driven by the momentum in Saudi Arabia and the UAE. The MSCI GCC index increased by 7.7% in 2023. In the context of the national economy, the IMF anticipates 3.6% real GDP growth in 2024, underpinned by attractive oil market dynamics. Inflation is expected to remain relatively subdued.”

Alghanim pointed out: “The global economy encountered significant challenges due to the effects of escalating inflation, rising interest rates and the prolonged war in Ukraine. The outbreak of war in the Middle East, and the cooling of the US-China relationship, further intensified supply chain constraints, and global GDP growth in 2023 declined to 3.1% compared to the previous year (World Economic Outlook January 2024 edition). On the other hand, the asset management sector is experiencing a data-driven transformation led by artificial intelligence. By generating superior insights, artificial intelligence supports decision-making, constructing investment portfolios, and enhancing risk management. This opens doors to a new approach to alpha generation and a future where asset management is dependent on leveraging the power of data.”

Business Strategy

Alghanim stated: “In light of the challenges in the economic landscape, Markaz has been driving its growth strategies by focusing on launching new products, enhancing wealth management distribution, and continuously improving its operational processes. Markaz has maintained a structured approach to asset selection and risk management and has taken significant steps in fortifying its transaction monitoring procedures, in compliance with the directives of the Capital Markets Authority.”

He added: “In the fintech space, Markaz is strategically investing in digital technologies to strengthen its position in the competitive landscape. With initiatives such as iMarkaz we are improving client access to investments, simplifying transactions with efficient online reporting and prioritizing client satisfaction. This approach is essential to cater for the evolving needs of digitally advanced clients and their investment needs.”

Alghanim mentioned: “By incorporating Environmental, Social and Governance (ESG) considerations into our investment frameworks, Markaz underscores its role as a trusted leader in responsible investment practices. Corporate Social Responsibility (CSR) in 2023 continued to focus on youth development initiatives such as the strategic partnerships with Loyac, sponsoring AC Milan Soccer School, and Watheefti fair. Additionally, Markaz supports local talent with its Markaz Graduate Development Program (MGDP) where we successfully recruit business graduates to train across our multiple departments. Our efforts extended to hosting enriching lifestyle seminars and supporting vital causes such as Kuwait Association for the Care of Children in Hospital (KACCH), Bait Abdullah Children’s Hospice (BACCH), and the Children’s Cancer Centre of Lebanon. In addition, Markaz supports the activities of Kuwait Red Crescent Society (KRCS) and the UN Refugee Agency (UNHCR).”

He said: “Markaz was honoured with ten distinguished awards in 2023 in various domains including Wealth Management, Research, Investment Banking, CSR, Digital Solutions and Diversity and Inclusion. The awards were presented by organizations such as Global Finance, Wealth Briefing, Euromoney and MEED. These recognitions reflect our successful strategy in establishing long term client engagement across all our offerings.

Outlook

“The formation of the new administration, headed by His Highness the Prime Minister, Sheikh Dr. Mohammad Sabah Al-Salem Al-Sabah, will contribute positively in achieving stability and enhancing Kuwait's business environment locally and internationally. Looking forward, the global economy is expected to grow by 3.1% in 2024 according to the IMF, reflecting the impact of sustained inflation, financial tightening, and geopolitical tensions. Despite a projected decrease from the previous year, inflationary concerns remain with an average forecast of 5.8% worldwide. Central banking policies are expected to remain cautious, with the US Federal Reserve closely monitoring key indicators. Despite the uncertainties around the upcoming American presidential elections, interest rates are expected to remain stable in early 2024 before rate cuts being implemented later in the year. Oil prices are predicted to remain steady at approximately $85 per barrel, although geopolitical factors could introduce volatility. The stability in oil prices is beneficial for Gulf economies, by enhancing its fiscal position at a time of broader uncertainties.” Alghanim commented.

“For 2024, Markaz’s fixed-income strategies will focus on identifying specific credit opportunities in the region and capitalizing on a potentially pivotal period for global interest rates. Our Investment Banking department is set to expand its offerings in IPOs, listings, bond issues advisory, and M&A. The real estate sector is expected to benefit from demographic and economic changes in the region, providing opportunities for the Markaz real estate division.” Alghanim concluded.

Mr. Ali Khalil, Markaz CEO also commented saying: “Markaz has navigated challenging market conditions, including the strong geopolitical developments that impacted the regional economies throughout the year, to deliver good performance and returns for our valued shareholders and clients across various asset classes. As we enter 2024, we are eager to celebrate our golden jubilee. We are proud of our 50-year history, marked by substantial growth and an active role in launching innovative investment solutions that have helped shape Kuwait's asset management and investment banking sector. We continue to be among the leaders in the Kuwait market by introducing the first momentum fund following a series of innovative investment strategies over the years. We firmly believe that investment opportunities are always present, regardless of market conditions, and we have maintained our leading position in the industry while expanding our client base with this approach.”

Strategic Initiatives

Khalil Highlighted: “Numerous industry awards have recognized the quality of our investment programs and services. Our dynamic strategy and proper risk management have ensured consistent and sustainable performance through volatile market cycles. Markaz's equity, fixed income, and real estate fund managers continue to focus on generating long-term returns.”

“Markaz launched a diverse array of products and services in 2023 that has positively shaped the investment landscape in Kuwait. The year was marked by a focus on the “Family Office” segment and customized services that have significantly broadened our Wealth Management capabilities. These services have been thoughtfully tailored to align with the evolving investor needs marked by the increasingly demanding needs of family offices in Kuwait. Our Wealth Management and Business Development team works closely with global advisors to empower our high net-worth and affluent clients to create investment vehicles, establish multi-generational endowments, and access a diverse range of international products. Simultaneously, we are prioritizing digitization to improve our customer experience.” He added.  

Khalil stated: “Our creative approach to investment banking exemplifies our commitment to helping our clients achieve their strategic and financial objectives. Markaz leverages its fifty years of expertise and outstanding reputation to assist our clients across the entire spectrum of investment banking, such as improving their capital structure, financing their operations, and acquiring or disposing of entities.”

“Heading into 2024, Markaz continues to refine its growth strategy, emphasizing an increase in Assets Under Management (AUM), fee growth, innovation of new investment products and solutions, and our client-centered investment banking services. Furthermore, Markaz will continue to offer clients tailored portfolios to match their risk profiles for investments in the GCC fixed-income market.” He added.

Solid performance across markets and sectors driven by exceptional execution capabilities

Equities

Global equity markets have experienced significant volatility due to uncertainty over interest rates and geopolitical tensions. Despite stable oil prices and promising economic growth prospects, the GCC markets have shown subdued performance this year. However, Markaz's "equities" team's active strategy has been delivering favorable performance compared to their respective indices, regardless of the market conditions.

Fixed Income

The Markaz Fixed Income Fund (MFIF), a privately placed fund, has consistently achieved its investment objectives, underpinned by a disciplined investment strategy. This performance is attributed to the fund's investment philosophy and balanced allocation policy.

International Real Estate

After a decade-long strong growth in the US and Europe, the challenges that emerged in 2022 continue to put downward pressure on real estate in 2023. However, regarding international real estate activity, 2023 was a year of success for us. We demonstrated the strength of our investment strategies and the soundness of our investment criteria. Markaz managed to exit a multifamily project and partially exit an industrial project, with investors receiving net IRRs of 10.0% and 18.0%, respectively. In Europe, we exited an industrial project with a net IRR of 11.9%.

Our investment philosophy has always been strategy agnostic, making us agile in promptly capitalizing on opportunities. This agility allowed us to pivot towards real estate debt last year as it offered favorable risk-weighted returns, and we will expand our real estate debt offering in 2024. In the longer term, the team will build on its conviction regarding favorable economic and demographic trends that will benefit select property types, mainly apartments, senior housing, and logistics.

MENA Real Estate

Our Markaz real estate fund (MREF) ended the year with excellent performance.  MREF was up by 7.7% for the year due to our managers’ ability to increase the occupancy rate across its properties from 77.3% at the start of 2022 to 91% by the end of 2023.  Our Markaz Gulf Real Estate Fund (MGREF) is a private placement fund that invests primarily in income-generating properties to generate stable income and returns through sound acquisition, management, and disposal of properties in the most promising segments of the real estate market in the GCC.

Our MENA Real Estate team has earned the preferred real estate manager position for leading institutions due to their hands-on approach, access to market data, and unmatched experience across GCC markets. The MENA Real Estate team continues to focus on expanding its flagship real estate funds and actively pursues development opportunities. The team is also exploring development projects across the GCC and Private Public Project (PPP) opportunities in Kuwait.

Investment Banking Services

Over five decades, Markaz built a distinguished reputation for delivering tailored and high-quality investment banking services to corporate clients and family offices in local and regional markets. Our proactive business development strategies in 2023 have been fruitful, with our investment banking team successfully acquiring new mandates and clients. During the year, our Capital Markets team successfully executed the first tranche of the KWD-denominated Tier II bond for the Commercial Bank of Kuwait, valued at 50 million KWD, and executed Tier II bonds for Ahli Bank of Kuwait, also worth 50 million KWD. Additionally, the team successfully placed the region's first KWD-denominated convertible bond.  Furthermore, our Advisory team implemented financial restructurings for high-profile companies, advised on mergers within the professional services and oil and gas sectors, conducted transaction feasibility studies, and prepared strategic expansion plans and valuations in the healthcare sector. These mandates reflect our highly regarded and trusted investment banking services.

As part of our business development efforts, Markaz is forging strategic partnerships with external advisors to enhance our client advisory capabilities. This approach further supports family groups in complex restructurings and succession planning and advising on stock exchange listings within and outside of Kuwait. We focus on actively pursuing new client engagements and deepening existing relationships, reinforcing our growth objectives.

Our People and CSR

During the year, Markaz continued to uphold its commitment to fostering a dynamic, merit-based, and enriching work environment, driving professional growth and achievement. The Company maintained a culture where the staff, at all levels, are involved in realizing our strategic ambitions and are accountable and rewarded for success. The Human Resources, Strategic Planning, and Corporate Communications teams have worked closely to align Markaz with its strategic aims through effective and transparent communication. As a testament to its commitment to nurturing new talent, Markaz conducted its seventh annual Graduate Development Program, sponsored opinion-shaping conferences, and hosted targeted developmental efforts. In 2023, Markaz relocated to a new office at Burj Alshaya. The move equips the organization to cater to the evolving needs of stakeholders in a dynamic and robust working environment more effectively.

Outlook

Current geopolitical tensions, particularly the war in the Middle East, have added further complexity to global economic prospects. Volatility is expected to remain across the financial markets in the year ahead. Nonetheless, Markaz’s investment teams possess the expertise and proven mindset required to identify emerging opportunities and create tailored financial solutions for its clients.

Our team members are committed to our growth strategy, which focuses on expanding our investment offerings, enhancing investment banking services, and providing personalized and digitized client experiences. The economic fundamentals of the GCC region offer a stable foundation for implementing our strategies.