• January 12, 2021

    Vaccine approval helps GCC markets recover most of the year’s losses

    GCC stocks staged a strong recovery towards the end of the year after seeing a sharp fall in March and April due to oil prices crashing and fears of sharp economic slowdown due to Covid-19. The benchmark S&P GCC Composite index recovered from the lows and ended the year with a fall of just 1.7%. GCC markets rose in November after pharmaceutical firms Pfizer, Moderna and AstraZeneca announced favorable news on COVID-19 vaccine development. Subsequently, several governments including many GCC...

  • December 8, 2020

    Stock Market Commentary: Vaccine optimism drives all markets higher

    All GCC equity markets ended the month in green as oil prices jumped by 27% for the month after pharmaceutical firms Pfizer, Moderna and AstraZeneca announced favorable news on COVID-19 vaccine development that rose investor hopes of quick recovery. Kuwait stock markets rose for the month with the Kuwait Main Market index registering a gain of 1.6%. Kuwait All Share index gained of 0.3% while its index PE ratio stood at 20, a premium of 33% compared to S&P GCC...

  • October 14, 2020

    COVID-19 derails traditional Kuwait retailers

    Kuwait’s retail sector is small in absolute terms when compared to regional peers like the UAE or Saudi Arabia. However, Kuwait has one of the highest concentrations of international retailers in the GCC, with luxury segment proving to be a major draw. The value of Kuwait’s retail market was KD 3.5bn or 9.1% of non-oil GDP, as of February 2018 (Oxford Business Group). Consumer preference towards international brands and better retail shopping experiences were exhibiting an upward trend until COVID-19...

  • October 8, 2020

    Will COVID-19 increase the Cost of Capital in the GCC?

    Cost of Capital represents the opportunity cost of all financial capital, primarily debt and equity, invested in an enterprise. ‘Opportunity cost’ also referred to as ‘hurdle cost’ or ‘discount rate’, is of primary importance in valuation and helps investors in arriving at the correct price of a company’s stock. Given the importance of this metric in creating value for shareholders, it is essential to compare the cost of capital for the GCC countries over the years. Key Points to be...

  • July 20, 2020

    Defensive sectors in GCC-A great bet in today’s times

    The 2020 stock market crash due to Covid-19 has been fast and short, if the markets do not fall to the lows of March 2020 again. The Oil price crash and social distancing measures to prevent the spread of Covid-19 has impacted sectors in the GCC in different ways.This can be observed in the current level of GCC Sector Indices. We make a comparison of the current levels of GCC sector indices with that of 52-week high and 52-week lowto...

  • July 14, 2020

    How has liquidity in Saudi Tadawul fared during COVID-19?

    Liquidity is one of the key indicators of a stock market and is a fundamental requirement for market efficiency. In recent years, Saudi Arabia’s equity market has implemented reforms, such as relaxation of foreign ownership and has achieved milestones such as inclusion in key indices including the MSCI Emerging Market Indices. With the listing of Saudi Aramco, it has also become one of the top 10 markets globally, by market capitalization. Given the market’s importance in GCC and globally, the...

  • July 9, 2020

    COVID-19 may force GCC companies to cut dividend payout

    Dividend payments have been an important tool to get investors to buy shares of companies as dividends provide a return on investment even during periods when the markets are down. GCC Companies listed on stock exchanges have provided consistent dividends in recent years. Due to Covid-19, many GCC Companies may be forced to cut dividend payouts due to fall in earnings and need to preserve cash. We examine the impact on dividends due to the pandemic and its ramifications for...

  • July 5, 2020

    Estimating future returns for Saudi Arabia Stock Market

    Need an equity market framework It is a classic mistake that all of us can be guilty of at some point in time. Mistaking historical stock market returns as a good proxy for future returns. While optimism breeds optimism, pessimism breeds pessimism. If we have a great decade (like how S&P 500 is), it will be nearly impossible to be utterly pessimistic and vice versa. Time and again it has been proved that history never repeats but rhymes. However, intuitively...

  • July 2, 2020

    10 million and counting: COVID -19 breaches a grim milestone

    As 2020 began with new hopes, little did the world know about an emerging threat coming out of the most populous country on Earth, a virus which spread like a wildfire in no time. The contagious nature of the virus made it more so difficult to contain it. The World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern on 30 January 2020, and a pandemic on 11 March. On 28th June 2020, the global confirmed...

  • June 17, 2020

    Kuwait Sector Indices: Comparison of declines due to COVID-19 and 2014-16 Oil Price Crash

    The 2020 market crash has been fast and short, if the trough of March 2020 holds. Lockdown to prevent the spread of COVID-19 brought about an uneven impact on sectors. While some sectors like airlines came to an absolute standstill, some sectors like technology stand to gain from the lockdown. These differences have reflected in the performance of equities too. A sector-wise comparison with the previous market crash of 2014-16 highlights the difference in COVID-19’s impact on sectors and what...