Oil posts sharp recovery in August; YTD gains reach 15.8%: Markaz

Oil prices showed a sharp recovery towards end-August, thereby leading to a “positive” return of 4.3% during the month, increasing the year-to-date (YTD) gains to 15.8%, Kuwait Financial Centre (Markaz) has said in a report.  Oil prices hovered around the $70 a barrel mark during the month as the fears on trade tension that could crimp global economic growth and increase financial vulnerability intensified.  However, it ended the month on a positive note closing at $77.4 a barrel as the Unipec of China affirmed that it would resume purchasing of US crude oil from October combined with higher than anticipated production cut by Opec-led coalition.

In its ‘Monthly Markets Review’, Markaz said August halted the “positive” momentum, amongst majority of GCC markets including Kuwait, which prevailed in the recent months as the investors booked profits.  Turmoil in Turkey and pull out of much and long awaited IPO of Saudi Aramco contributed to the “negative” sentiment, it said.  Kuwait all share index lost 0.7% for the month. Despite the losses registered in this month, Saudi Arabian and Kuwait indices’ returns for the year remained healthy at 10.0% and 4.5%, respectively.  Among Kuwait’s blue chip companies, Zain was the leading decliner, down by 1.9% during the month while Boubyan Bank share price moved upwards, gaining 2.5% in August.

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Oil prices hovered around the $70 a barrel mark during August as the fears on trade tension that could crimp global economic growth and increase financial vulnerability intensified

The decline in Zain stock was due to investors partially booking profits after it posted strong financials earlier during the month. The average traded value of Kuwait All Share index dipped by 21% in the month of August to KD20mn as compared to previous month.  The liquidity was affected mainly due to subdued trading due to summer month lull. The S&P GCC index was down 2.5% for the month, reducing the overall gains for the year to 9.6%. During the month of August, Saudi Arabia’s Tadawul index lost 4.2% as selling pressure from foreign investors intensified.

Qatar Index best performing: In terms of YTD performance, Qatar index delivered 16% since the beginning of the year making it the “best performing” market across emerging and developed markets globally. “Qatar markets continued to remain strong post Moody’s decision to change the country’s sovereign outlook from negative to stable,” Markaz said.  Ezdan Holdings was the top performer among GCC blue chip companies, rising by 14.4% during the month. Ezdan Holding Group saw a surge in profits by 52.5% in Q2 2018 as compared to same period last year. Ezdan’s net profits amounted to QR320.11mn in the period between April to June.

MSCI EM index also remained under selling pressure, as investors’ appetite remained weak due to global uncertainties like EM currency depreciation against dollar, trade war concerns, etc. MSCI EM index closed 2.9% down.  On the other hand, MSCI World index ended the month on a positive note, registering 1% gain for the month.

Sources and photo-credits: Gulf Times