Kuwait Times - 19/4/2006
Kuwaiti stocks edged lower yesterday, even as crude oil prices topped $70 a barrel. Losses were especially heavy in the investment, industrial and services sectors. All three major indices had traded on both sides of unchanged in the early morning, before turning decidedly lower by mid-session.
By session's end, the Global General Index (GGI) (down 2.91 points to 298.13 points) shed 0.97 per cent. This index has lost 6.9 per cent so far in 2006. Reflecting the bearish trend, the market benchmark, KSE Price Index, (down 99.5 points to 10,449.2 points) lost 0.94 per cent.
Yesterday's losses contrasted with strong gains on Monday and last week that have helped build a case that the market is gearing up for a rally.
US light sweet crude settled up $1.08 to $70.40 a barrel on Monday, the highest settlement since the contract began trading in 1983, but still below the intraday high of $70.85 hit last August after Hurricane Katrina battered oil infrastructure along the US Gulf Coast.
The continuing rhetoric out of Iran over the weekend helped keep it supported and poised to go higher. In news, Global Investment House (Global) will invite a select group of investors to participate in the private placement of a new hospitality company that will invest $500mn over the next five years in serviced residence properties in the region. Global has entered into a landmark partnership with Singapore-based Fraser Serviced Residences (Fraser) to develop the new company, which will have an exclusive right to develop and own Fraser Serviced Residencies in the region.
By sector, investment stocks headed the retreat, with the sector index shedding 1.83 per cent in the day. Shares of Al-Mal Investment Co and International Financial Advisors (IFA) dropped 5.97 per cent and 5.38 per cent respectively. On the flip side, Osoul Leasing & Financing Co rose 4.72 per cent.
Volume was relatively light, with 144.71mn shares exchanged on the Kuwait Stock Exchange board. On the broader market for equities, decliners outpaced advancers by a 65 to 24 margin.
On a more positive note, Global Food Index managed to eke out 0.55 per cent in gains yesterday. A 2.63 per cent jump in the equity price of Kuwait United Poultry Co bolstered the sector's performance.
Shares of five of the Global Large Cap Index components lost ground yesterday, sending the index down by 0.74 per cent. Logistics giant, Public Warehousing Co saw its share value depreciate by 3.31 per cent. The Investment Dar too wiped out some of Monday's gains, dipping 2.7 per cent. Elsewhere, shares of Commercial Facilities Co ended the day flat at 690fils. We had recommended a price target of 810fils in our report on the company's stock in August-2005. Since then the stock price went through a volatility phase, with fluctuations in both directions. However, we expect the stock to gain positive momentum thanks to the healthy growth factors as well as the continued growth in the growing consumer class. Keeping in line with the improved performance of CFC and our expectations about its future potential, we have valued CFC's share price at 755fils, which implies a 9.42 per cent upside to its current level. Hence, we recommend a HOLD on the stock with a medium term perspective.
Shares of Al-Madina for Finance & Investment will be listed on Kuwait Stock Exchange on 24-04-2006.
Shares of RAK Co for White Cement, The Transport & Warehousing Group and Hilal Cement Co will be traded exdividends as of today (19-04-2006).
Shares of Al-Ahlia Insurance Co was traded ex-dividend as of yesterday(18-04-2006).
Global Investment House (Global) and Singapore-based Fraser Serviced Residences (Fraser) will launch a Middle Eastern hospitality company that will invest $500mn over the next five years in serviced residence properties in the region. The company will aim to develop seven gold standard serviced residences in key gateway cities in the Gulf region, which will then be managed by Fraser. Dubai-based RSP Group, will act as the hospitality advisor to the company.
Mobile Telecom Co concluded an agreement with Kuwait Aiptek Earls to introduce a new service, which will include the management of the movement of fleets of vehicles for large companies.