The Kuwaiti Financial Center “Markaz”, in its monthly report on the performance of the Gulf stock markets for the month of April 2023, stated that the Kuwaiti market witnessed an increase during the month, with a monthly increase of 1.3%. Among the sectors in Boursa Kuwait, the insurance sector index was the biggest gainer during the month. up by 10.7%, while the technology sector declined by 8.5% in April.
Among the first market companies, shares of Gulf Cables and Electrical Industries and Al-Imtiaz Group achieved the largest gains during the month by 16% and 14.9%, respectively. The share of Ali Al-Ghanim Sons Motors was the lowest during the month, at 4.1%.
The report indicated that the consumer price index inflation rate in Kuwait increased by 3.7% on an annual basis and 0.7% on a monthly basis in March, mainly driven by food and beverage prices, which rose by 7.5% on an annual basis and 0.7% on a monthly basis. .
Kuwait’s real GDP growth is expected to increase by 0.9% in 2023 according to the International Monetary Fund’s April 2023 World Economic Outlook update, which is significantly lower than the previous estimate of 2.6% in October 2022.
Inflation is expected to average 3.3% in 2023, higher than the previous estimate of 2.4%. As for the per capita GDP in terms of purchasing power, Kuwait has fallen in the rankings of the richest countries in the world to rank 36 out of 193 countries, after it was ranked 31 in the previous year.
In terms of the region, the performance of the Gulf markets was positive, and the Standard & Poor’s GCC Composite index increased by 4.9% during the month, and all indices ended the month positively, except for Qatar and Oman. The Saudi market index recorded an increase of 6.8% during the same period, supported by the rating upgrade announced by Fitch Agency, as it raised the Kingdom’s rating from A to A+, praising the Kingdom’s strong financial and external budgets, which include a favorable debt-to-GDP ratio and strong sovereign net foreign assets. .
Aramco and Saudi Telecom rose 12.4% and 10.9%, respectively, during April. These changes resulted from the upgrading of Saudi Aramco’s credit rating by Fitch from A to A+, and the sale of Saudi Telecom Company (STC) of its full stake amounting to 49% in the call center company. The Omani market index decreased by 3%, and the Qatari market by 0.3% during the month.
The Markaz report indicated that the World Bank updated its forecast for economic growth for the GCC countries during 2023 to 3.2% in April, which is lower than the previous forecast of 3.7%. The real GDP of the UAE is expected to increase by 3.9% in 2023 and 4.3% in 2024, according to the Central Bank’s forecasts.
The International Monetary Fund had recently predicted that the UAE economy would expand at a faster pace in 2024 at 3.9% compared to 3.5% this year, while reducing the forecast for 2023 by 70 basis points from 4.2% in October 2022 to 3.5%.
According to the World Trade Organization, the value of merchandise trade in the UAE reached $1 trillion (3.67 trillion dirhams) in 2022 with an increase in exports and imports as a result of increased economic activity. an eight-year level of 59.8 in February.
Inflation in the kingdom slowed to 2.7% on an annual basis in March from 3% on an annual basis in February, mainly driven by an increase in residential rents. Qatar is expected to achieve a budget surplus of 6.5% in 2023 and 5.3% in 2024, according to the latest World Bank estimates.
The performance of developed markets was relatively positive in April, as the MSCI World Index rose by 1.6%, and the S&P 500 rose by 1.5%, despite the poor results of blue-chip companies during the first quarter of 2023.
Real GDP growth figures for the first quarter of 2023 were recorded at 1.1% year on year, indicating a slowdown in the economy. US consumer price inflation slowed to 5% yoy in March, down from 6% yoy in February, and was lower than economists’ forecasts of 5.2% yoy.
Service and manufacturing activity in the US global S&P composite PMI rose to a peak level of 53.5, which was attributed to increased demand, improved supply chains and stronger new orders.
In the UK, the CPI rose to 10.1% y/y in March compared to 10.4% y/y in February, mainly driven by rising food and beverage prices. In the Eurozone, inflation fell to 6.9% in March from 8.5% in February on an annual basis, on the back of lower energy prices.
However, the core CPI rose to 5.7% in March from 5.6% in February. The MSCI Emerging Markets Index rose slightly by 0.8% for the month.
Markaz dealt with the performance of oil, as its prices recorded a decline of 0.3% to close at $79.5 a barrel, due to concerns about the volume of US demand, as the US gross domestic product decreased by 1.4% on an annual basis in the first quarter of 2023, in addition to the state of uncertainty. on further interest rate increases despite the production cuts announced by OPEC+ earlier in April.
The direction of the oil price is likely to be determined by the outcome of the Federal Open Market Committee, which is expected to meet in the first week of May. The Bank of England and the European Central Bank are also expected to raise interest rates at upcoming meetings. Gold prices rose by 1.1% in April to $1989.2 an ounce, as a result of the weak performance of the dollar.
Markaz indicated in its report that the meeting of the Federal Open Market Committee scheduled to be held in the first week of May is likely to determine the context of the global market performance in the foreseeable future. With US inflation declining and borrowing rates at their highest levels in a decade, there are strong indications that the US Federal Reserve will raise interest rates by 25 basis points in the current cycle before pausing this policy.
The markets are awaiting the results of the upcoming meeting of the Federal Reserve, as it gives clues as to whether or not we could see a pause in interest rate hikes. These results may lead to some rise in share prices.
And as of May 2023, the producing countries decided to reduce production by 2 million barrels per day, which is equivalent to 2% of the global demand for oil. The International Energy Agency expected that the jump in oil consumption in China would increase global oil demand by 2 million barrels per day, reaching a record level of 101.9 million barrels per day in 2023.
The direction of the oil price is likely to be determined by the outcome of the Federal Open Market Committee, which is expected to meet in the first week of May. The Bank of England and the European Central Bank are also expected to raise interest rates at upcoming meetings. Gold prices rose by 1.1% in April to $1989.2 an ounce, as a result of the weak performance of the dollar.
Markaz indicated in its report that the meeting of the Federal Open Market Committee scheduled to be held in the first week of May is likely to determine the context of the global market performance in the foreseeable future. With US inflation declining and borrowing rates at their highest levels in a decade, there are strong indications that the US Federal Reserve will raise interest rates by 25 basis points in the current cycle before pausing this policy.
The markets are awaiting the outcome of the upcoming meeting of the Federal Reserve, as it gives clues as to whether or not we might see a pause in interest rate hikes. These results may lead to some rise in share prices.
The OPEC+ production cut policy starting in May has led many investment banks to revise their oil price forecasts for 2023 and beyond. Although this gives an impetus to the GCC markets, the slowdown in global oil demand may remain a drag on oil prices as recession fears persist.
