KUWAIT CITY, Dec 03: Kuwait Financial Centre “Markaz” released its Monthly Market Review report for November 2024. Kuwait equity markets were positive for the month driven by banking, basic materials and consumer discretionary sectors.

Kuwait equity index (All Share Index) gained 1.2% for the month driven by continued momentum from positive earnings results and the performance of banking and basic materials stocks, while continuing geopolitical uncertainties added downward pressure on regional markets. The banking sector index registered a marginal increase of 1.6% during the month. Kuwait is the only GCC economy to not follow the Fed in cutting interest rates by 25-bps in November 2024. The decision to hold interest rates higher coupled with reports of solid credit growth in October was favorable to the banking sector. Shares of Commercial Bank of Kuwait, National Bank of Kuwait and Kuwait Finance House gained 3.8%, 2.4% and 2.4% respectively, owing to the interest rate cuts coupled with continuing momentum from Q3 2024 earnings. Among Premier market stocks, Jazeera Airways gained 6.0% on reporting a net profit of KD 11.6 million in Q3 2024, a 66.1% y/y increase from Q3 2023.  

Kuwait recorded a small surplus of KD 150 million for the first six months of FY 24-25, based on preliminary public finance figures from the Ministry of Finance, as against a deficit of KD 1.4 billion in the same period of the previous year. Kuwait inflation eased to 2.4% y/y in October, down from 2.8% y/y in September, driven by slower price growth across categories, especially food and beverage which grew 5.0% y/y in October compared to 5.8% y/y in September 2024. Kuwait’s domestic credit increased by 0.4% in October, reflecting a YTD growth of 2.9%.  Kuwait real estate sales showed continuing signs of recovery with second consecutive m/m increase in October of 14.9% m/m to a 5-month high of KD 326 million.

The S&P GCC composite index registered a decline of 1.4% in November, dragged down by continuing geopolitical tensions in the Middle East and the subdued performance of blue-chip stocks. Saudi equity index declined 3.2% during the month weighed down by poor performance of many of its blue chips. ACWA Power shares witnessed a sharp fall of 20.9%. The Dubai equity index rose 5.6% for the month, extending its yearly gains to 19.4% supported by the strong performance of real estate stocks. Emaar Properties rose 9.9% due to strong Q3 2024 results from its listed subsidiary, Emaar Development, which rose 22.3% during the month. Qatar equity index fell 1.0% driven by geopolitical tensions and continued sell-offs by foreign funds.

Central Bank Policy rates were reduced by 25 bps in all GCC countries except Kuwait, following a similar decision by the U.S. Federal Reserve. UAE domestic credit growth accelerated for the second consecutive month in July, at 6.3% y/y, close to the 8-year high of 6.5% in April. The Saudi Ministry of Finance released the fiscal year 2025 budget statement and projected a wider deficit of SAR 101 billion (USD 27 billion), equivalent to -2.3% of GDP. S&P Global Ratings affirmed its 'AA/A-1+' long- and short-term foreign and local currency sovereign credit ratings on Qatar, with a stable outlook.

MSCI World and S&P 500 indices rose by 4.5% and 5.7% respectively for the month. The technology-weighted Nasdaq index gained 5.2% during the month. Trump’s victory in the U.S. elections as well as rate cuts by the U.S. Fed contributed to strong performance of U.S. stocks. Amongst the M7, Tesla rose 38.1% for the month, on expectations that CEO Elon Musk's companies will get favorable treatment under President-elect Donald Trump for his extensive support during the poll campaign. The U.S CPI rose 2.6% y/y in October, higher compared to 2.4% y/y in the previous month meeting consensus estimate of economists. U.S job creation significantly declined in October with only 12,000 new jobs added as against 254,000 in September, owing to the impact of hurricanes and strikes, including at Boeing. The unemployment rate held steady at 4.1%.

The MSCI EM index fell 3.7% for the month driven by Trump’s views on diversified chip manufacturing and its impact on the automobile industry. Taiwan, known for its semiconductor industry, declined 2.4% during November and South Korea, which has strong automobile industry presence, declined by 3.9% during the month. Chinese stocks rose 1.4% following Beijing’s announcement of a RMB 10 trillion debt swap to ease the burden on indebted local governments and the raised debt ceiling for local governments.

The yield on the 10-year U.S. Treasury fell by 10 bps during the month closing at 4.18%. Persistent U.S inflation, despite weak jobs data coupled with uncertainty surrounding Trump’s inflationary policies continued to hold the treasury yields higher during the month. The yield on the 2-year U.S. Treasury note fell by 3 bps during the month closing at 4.13%.  

Oil price was range bound between USD 71 and USD 76 per barrel, settling at USD 73.2 per barrel at the end of the month compared to USD 73.16 per barrel in the previous month, registering a gain of 0.3% during the month of November. Persisting geopolitical tensions in the Middle East and reports that OPEC+ could delay a planned oil production increase scheduled to take effect in January supported oil prices. OPEC forecasts world oil demand to rise by 1.82 million barrels per day (bpd) in 2024, down from growth of 1.93 million bpd projected last month.

The outlook for global equity, commodity, and fixed income markets for December hinges on U.S economic data releases, Fed’s December meeting and the geopolitical developments in the Middle East. While another cut seems likely by the end of 2024, a measured approach to easing monetary policy by the Fed, coupled with policy stance of the new incoming President in the U.S., could shape market direction. In the GCC, OPEC+ supply, U.S. Fed’s policy direction and developments on the geopolitical front would impact equity markets.