KUWAIT CITY, November 4: Kuwait Financial Centre “Markaz” released its Monthly Market Review report for October 2024. Kuwait and GCC equity markets remained muted during the month weighed down by rising geopolitical tensions and volatility in oil prices. U.S equity markets ended negative in October, after registering gains for five consecutive months due to concerns over persistent inflation and a strong labor market.

Kuwait equity index (All Share Index) gained 0.3% for the month driven by a slew of positive earnings results, while geopolitical uncertainties added downward pressure on regional markets. Kuwait main market index gained 3.9% for the month, extending its yearly returns to 17.1%. The continuing bullish sentiment is due to expansion of investor base and positive performance of few non-banking sectors such as financial services and real estate. The banking sector index registered a marginal decline of 0.4% during the month. NBK share price fell3.7% in October. NBK posted a 5.7% y/y rise in Q3 2024 with net profit amounting to KD 165 million (USD 538 million). KFH also came out with their results for 9M 2024, posting a net profit of KD 482.9 million, an increase of 4.6% y/y. Commercial Bank of Kuwait was the top gainer among banking stocks with a monthly uptick of 7.9% after Fitch affirmed a stable outlook on CBK. Among Premier market stocks, Agility Public Warehousing Company gained 13.7% following an announcement of expanding its warehousing facilities owned by Agility Logistics Park in Riyadh for SAR 250 million.

Kuwait inflation mildly eased to 2.8% y/yin September, down from 2.9% y/y in August driven by slower price growth across categories. Prices in housing services grew 0.6% y/y, the lowest since August 2021. Food & beverage prices remained elevated at 5.8% y/y, however lower than previous month’s reading of 6% y/y. Kuwait’s population reached 4.92 million as of June 2024, growing by 2.0% y/y compared to the 2.6% y/y growth recorded in 2023, according to PACI.

The S&P GCC composite index registered a decline of 1.2% in October, dragged down by rising geopolitical tensions in the Middle East and the subdued performance of blue-chip stocks. However, a positive start to Q3 2024 corporate earnings season marginally lifted the investor sentiment. Among the GCC equity indices, Saudi Arabia, Abu Dhabi and Qatar equity indices ended the month in red while others remained mildly positive. Saudi equity index declined 1.7% during the month weighed down by the downgrade of its 2024 growth forecast to 1.5% from 1.7% from IMF in its World Economic Outlook report released in October 2024 and muted performance of few major blue-chips. Ma’aden shares rose 15.6% during the month driven by positive sentiment after the announcement of acquiring 20.62% stake in Aluminium Bahrain (Alba) and plans of Manara Minerals (a joint venture between Ma’aden and Public Investment Fund) to acquire between 15-20% equity in Canadian miner First Quantum Minerals’ Zambian copper and nickel assets. The Abu Dhabi equity index declined by 1.0% in October. First Abu Dhabi bank (FAB) share price fell 4.4% for the month due to muted profit growth in Q3 2024. FAB net profits rose 4% y/y to AED 12.9 billion in 9M 2024 and by 5% y/y in Q3 2024 to AED 4.5 billion. The Dubai equity index inched up 1.9% for the month, extending its yearly gains to 13.1% supported by the strong performance of real estate stocks. UAE real estate stocks Emaar Development and Aldar Properties gained 6.3% and 1.3% respectively. Qatar equity index fell 0.8% driven by the plunge in natural gas prices and sell-offs by foreign funds.

The UAE real GDP is projected to grow at 4.1% in 2025, according to the World Bank’s latest semi-annual MENA Economic Update. Real GDP per capita growth rate is expected to be at 3.4% in 2025 driven by robust growth in the non-oil sector. Saudi Arabia's inflation rate edged up to 1.7% y/y in September, from 1.6% y/y in August driven by increase in housing rents.

MSCI World and S&P 500 indices fell by2.0% and 1.0% respectively for the month. The muted performance of the technology stocks and persistent U.S inflation outweighed the positive start to Q3 corporate earnings season. The technology-weighted Nasdaq index fell0.8% during the month due to concerns over rising costs for AI-related companies. The electric vehicle manufacturer Tesla posted unexpectedly strong Q3 earnings with net income rising 17.3% y/y and EPS of 72 cents against analyst expectations of 58 cents.

The U.S personal consumption expenditure (PCE) price index, closely watched by the U.S Fed, increased 0.2% m/m in September compared to 0.1% m/m in August, in line with expectations. The U.S CPI rose 2.4% y/yin September, lower compared to 2.5% y/y in the previous month but above the consensus estimate of economists. Core inflation increased 0.3% m/m and 3.3% y/y, higher than forecast. U.S job creation surged in September with 254,000 new jobs added, higher than expected, coupled with a fall in unemployment rate. The European Central Bank lowered its key deposit rate by 25 bps to 3.25% in its October meeting. The MSCI EM index fell 4.4% for the month driven by negative performance of Chinese and Indian equities. Chinese stocks fell 1.7% as the recent stimulus measures failed to inspire investor confidence.

The yield on the 10-year U.S. Treasury rose by 47 bps during the month closing at 4.28%.Persistent U.S inflation, strong jobs data coupled with uncertainty surrounding the U.S elections and its impact on the heightened government debt drove the treasury yields higher during the month. The yield on the 2-year U.S. Treasury note rose by 50 bps during the month closing at 4.16%.

Oil price settled at USD 73.16 per barrel compared to USD 71.77 per barrel in the previous month (average price USD 81.32 per barrel during Jan-Oct 2024), registering a gain of 1.9% during the month of October. Escalating geopolitical tensions in the Middle East and reports that OPEC+ could delay a planned oil production increase scheduled to take effect in December supported oil prices. OPEC forecasts world oil demand to rise by 1.93 million barrels per day (bpd) in 2024, down from growth of 2.03 million bpd projected last month. China accounted for the bulk of the 2024 downgrade and its oil demand growth forecast was trimmed down to 580,000 bpd from 650,000 bpd.

The outlook for global equity, commodity, and fixed income markets for November hinges on U.S economic data releases, Fed meeting and geopolitical tensions in the Middle East. Markets widely differ in their expectations of the size of rate cut in the upcoming Fed meeting on Nov 6-7th. Against the backdrop of the latest U.S economic data, majority of the market expects U.S Fed to be measured in its easing of monetary policy, Economic data releases during next month would shape investor expectations. Additionally, Q3 earnings release from GCC blue chips, OPEC+ supply and developments on the geopolitical front would impact GCC markets.