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Kuwait Quarterly Market Review
May 8, 2013
Kuwait Economic Overview
Economies in the Middle East and North Africa (MENA) region continue to grow, albeit slowly, due to uncertainty over global
economic recovery. In 2012, the MENA region grew at an estimated rate of 4.8%, with the six-member GCC region expanding
5.5% (lesser than 7.5% in 2011). Kuwait was one of the strong performers, with estimated real GDP growth of 5.1%, buoyed by
strong fiscal dynamics.
Kuwait posted a record budget surplus of KWD17.2bn (USD60.5bn) at the end of 10M-2012, reflecting 20% growth on YoY
basis. Revenues totaled KWD27.0bn (forecast of KWD13.9bn), with income from oil contributing nearly 94%. Spending stood at
KWD9.8bn, which is less than half of the KWD21.2bn earmarked for the period. Kuwait is expected to achieve a budget surplus
th
for the 15 consecutive year during FY 2012–13. The forecast stands at KWD15.9bn vis-à-vis KWD13.2bn (USD47bn) in FY
2011–12 and significantly higher than KWD5.3n in FY 2010–11. Furthermore, the government estimates its oil revenues at USD
65 per barrel, which is significantly lower than the global oil prices recorded over the last couple of years. In fact, S&P projects
Kuwait to generate budget surplus in excess of 20% of its GDP over the next four years. The fiscal policy is expected to be
expansionary as the government increases expenditure for development projects. Finance Minister Mustafa Al- Shimali
announced that KWD4.5–5bn is anticipated to be spent on development projects during FY 2013–14. Separately, the current
expenditure would increase steadily; due to the rising incidence of strikes by public sector workers, the government has been
forced to raise salaries.
According to the IMF, the Kuwait’s economic growth is expected to plummet to 1.1% in 2013 before recovering in 2014. Low
growth can be ascribed to a slowdown in oil production, after two years of sharp rises, due to weaker global demand. In
addition, the IMF estimates non-oil GDP growth for 2012 at 2.7% (lower than 4.4% in 2011), constrained by domestic political
tensions and bureaucratic issues. The country uses its oil reserves prudently to shore up the balance sheet. The current
account surplus (45.6% of GDP in 2012, improvement from 44.0% in 2011 and 31.9% in 2010) is expected to remain around
41.7% in 2013.
Following an IMF warning that Kuwait could struggle to preserve its oil wealth for future generations, the country increased the
proportion of revenues allocated to the Reserve Fund for Future Generations (RFFG) to 25% in FY 2012–13 from 10% earlier.
The fund is managed by Kuwait Investment Authority (KIA), the country’s sovereign wealth fund. The size of future generation
reserves in Kuwait reached KWD73.63bn (USD262bn) at the end of FY 2011–12.
Exhibit 2: Kuwait – fiscal dynamics
Exhibit 1: Real GDP growth
120
50%
105
45%
20
15
10
40%
75
35%
60
5
30%
45
0
2009
2010
2011
2012F
2013F
2014F
% of GDP
USD bn
In percent
90
25%
30
-5
15
20%
2009
-10
Real GDP
Source: IMF
1
Real oil GDP
Real non-oil GDP
Revenue
Source: IMF
2010
2011
Expenditure
2012F
2013F
2014F
Current account surplus (RHS)
Kuwait Quarterly Market Review
May 8, 2013
Crude oil production in Kuwait to remain constant in 2013
Production of crude oil in Kuwait remained high at 2.8mn bpd throughout Q1 2013, accounting for 9.2% of the total in the
Organization of the Petroleum Exporting Countries (OPEC) (30.2mn bpd). According to OPEC, Kuwait’s proven oil reserves
stand at an estimated 101.5bn barrels (7% of global reserves). In 2012, the country produced an average of 2.8mn bpd; in fact,
production exceeded 3mn bpd during the end of the year to actively meet the global market shortfall of 1–1.5mn bpd. Kuwait is
looking to increase oil production to 4mn bpd by 2020 and maintain this level through 2030. With increasing demand and
attractive prices, the country expects to benefit from oil exports in the long term. Separately, Kuwait requires significant oil for
power generation, which reaches nearly 50,000 bpd during the summer.
Among Middle East countries, Saudi Arabia recorded high oil production of 9.1mn bpd in Q1 2013, while Iran and Iraq produced
2.7mn bpd and 3.1mn bpd, respectively. Oil production in Qatar has remained almost stagnant at 0.7mn bpd over the last five
years. Saudi Arabia, the world’s biggest oil producer, reduced its output in Q1 2013 primarily due to volatile global economic
conditions. Uncertainty over the fiscal cliff in the US coupled with the rising debt ceiling pushed prices lower. The Cyprus debt
woes added to the bearish sentiment in global markets. Separately, the Middle East countries have found a new competitor in
the US, which has long been trying to increase oil production. In fact, crude oil inventory in the US stood at 395.3mn barrels at
the end of April 2013, the highest level since 1982.
On the positive side, OPEC estimates demand for oil to rise to 89.66mn bpd in 2013 (88.87mn last year), with demand
expected to arise in H2 2013. This can be primarily ascribed to signs of global economic recovery, particularly in highconsumption Asian countries.
Kuwait exports maximum oil to Asian countries
Kuwait exported 1.82mn bpd of oil in 2011, of which 82.6% was directed to Asia-Pacific. Asian countries have been one the
biggest consumers of oil in the world due to their huge population. Significant economic development in some of the biggest
Asian nations, like China and Japan, has boosted demand for oil. In fact, Asian imports of oil increased to 1.50mn bpd in 2011
from 1.35mn bpd in 2007. OPEC data suggests that global oil consumption was the highest in the Asia-Pacific in 2011—it grew
3.0% YoY to 27.72mn bpd.
Exhibit 3: Crude oil production in key Middle East countries
Exhibit 4: Kuwait oil export (to countries)
12.0
1.6
1.4
10.0
in million bpd
in million bpd
1.2
8.0
6.0
4.0
1.0
0.8
0.6
0.4
2.0
0.2
0.0
0.0
2007
Iran
Iraq
Source: OPEC
2
2009
Kuwait
Qatar
2011
Saudi Arabia
2007
2013YTD
United Arab Emirates
Europe
Source: OPEC
2008
North America
2009
2010
Asia and Pacific
2011
Africa
Kuwait Quarterly Market Review
May 8, 2013
Improved global economic scenario pushes oil prices higher
Oil prices are expected to remain high due to improved global economic conditions. The US government successfully averted a
debt crisis in Q1 2013 by extending its debt limit until May 2013. This avoided the threat of US default and allowed the
government to borrow money. Separately, the Federal Reserve (Fed) reiterated its USD85bn-per-month bond buying program
to spur economic growth and reduce unemployment. In the Eurozone, Cyprus was able to clinch a last-minute bailout to prevent
a total financial collapse. Even analysts who predicted slowing growth in emerging economies, especially India and China,
witnessed that the decline in oil prices was short-lived—prices started to increase in Q1 2013. However, rising supply of crude
oil lowered the higher incremental price effect seen in early 2011.
The price of crude oil is forecasted to remain above USD100 per barrel in 2013. For example, Citi raised its forecast, citing
better-than-expected crude prices in Q1 2013; the company had earlier cut its oil price forecast on increased production in the
US and lower demand. Credit Suisse, meanwhile, opined that oil would move in a range until 2015, although prices would
remain on the higher band in 2013. The Bank of America expects the average oil price to be USD110 per barrel; however, it
remains pessimistic in the short term as some important cyclical pressures, such as lower demand for energy in China and the
Eurozone credit crisis, could dent prices. Barclays, with a price estimate of USD112 per barrel, expects high demand in Q2
2013 wherein non-OECD and OECD numbers would match for the first time. However, geopolitical problems in Iran pose the
biggest risk to oil.
Exhibit 6: Oil Price Forecasts –2013
130
RBS
120
Mirae
115
Deutsche
113
110
115
Credit Suisse
112
100
Barclays
112
90
Goldman Sachs
110
80
Bank of America
110
Standard Chartered
109
WTI Crude
Brent Crude
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
104
Aug-12
Citi
Jul-12
106
Jun-12
Macquaire
May-12
UBS
60
Apr-12
70
Mar-12
USD per barrel
Exhibit 5: Oil prices
0
50
100
150
USD per barrel
1Q 13
Source: Bloomberg
109
Source: Bloomberg
Inflation likely to remain at 3–4% in 2013 and 2014
Kuwait’s headline inflation decelerated to 2.9% in 2012 from 4.7% in 2011 and 4.0% in 2010. Food inflation, which rose to 9.7%
in 2011, eased to 5.6% in 2012, despite an increase in public sector wages. Food prices (constituting 18.3% of the consumer
price index) declined due to the government’s extensive subsidy system. In addition, Kuwait, which primarily depends on food
imports, benefited from the downtrend in global food prices—world prices were seen contracting due to lower freight charges
and surplus production, especially rice and sugar. Kuwait’s inflation declined to an average of 2.0% YoY in Q1 2013 from 2.3%
in Q4 2012 as food price inflation eased to 0.3% YoY from 3.3% YoY. However, the housing & utilities segment (the largest
component, accounting for 26.7% of the CPI basket) rebounded to 2.5% YoY in Q1 2013, although it moderated to 2.0% in
March 2013. Housing rents, which dominate (almost 95%) the broader housing & utilities segment, remained high as rental
demand in Kuwait continued to be supported by the lack of affordable housing. However, the new government has devised a
3
Kuwait Quarterly Market Review
May 8, 2013
clear strategy to resolve the housing problem and speed up construction of new projects. In the longer term, about 0.17mn
houses are expected to be built by 2020, while short-term projects include 5,888 residential units in 2013 and 8,191 in 2014.
Kuwait’s broad measure of money supply (M2) rose 9.1% YoY and 1.8% MoM to KWD30.35bn in February 2013 from
KWD27.82bn in February 2012. The country's net foreign assets grew 3.3% MoM to KWD14.91bn from KWD14.44bn in
January 2013. During the same period, private sector claims edged up 0.45% MoM to KWD29.30bn million from KWD29.17bn.
Furthermore, government claims increased 1.5% MoM to KWD1.69bn in February 2013 (KWD1.67bn in January).
Exhibit 7: Inflation
Exhibit 8: Money Supply Growth
12%
15%
10%
10%
8%
5%
6%
4%
Source: IMF
Feb-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
Food Inflation
Apr-11
Headline Inflation
Housing related inflation
Feb-11
2%
-10%
-15%
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
0%
-5%
M2 Growth
Source: IMF
Consumer and business confidence to remain high
Kuwaitis have renewed confidence in the economy, despite slower global growth. In a survey conducted by MasterCard for its
latest ‘MasterCard Index of Consumer Confidence’, Kuwait ranked second in the Middle East, only after Qatar. Consumers
appeared more positive about all five indicators measured in the index during the H1 2013 survey, where it scored an overall
95.8 vis-à-vis 84.7 in H2 2012. Consumers voted the highest on regular income (98.8 vs. 96.2 in the previous index), followed
by quality of life (96.6 vs. 91.3), economy (95.7 vs. 88.3), employment (93.9 vs. 88.8) and stock market (93.8 vs. 59.0). The
strong ratings for regular income and quality of life highlight Kuwait’s economic stability and high standard of living.
A similar survey undertaken by Bayt.com (employment portal) and YouGov (research and consulting organization) in March
2013 found that overall confidence across the MENA region is high. Kuwaitis expect both personal and the country’s financial
condition to improve; infact they also expect more jobs. About 25% opined that the economy has improved during the past six
months, while 48% believe that the economy would improve from its current state over the next half of the year. In terms of
business conditions, about 33% believe the present environment is good, while 65% anticipate improvement in the next one
year. About 33% expect more jobs in the near future, while 43% believe there are sufficient jobs currently. In terms of lifestyle,
30% would consider buying a property in the next 12 months, while 39% plan to purchase a vehicle. Strong growth in
disposable income and a high percentage of working population coupled with huge government expenditure could significantly
raise consumption levels in the country.
Markets improve amid political certainty and strong economic fundamentals
The Kuwaiti market yielded 13.3% in Q1 2013 vis-à-vis negative returns of 0.8% in Q4 2012. In fact, Kuwait, which has a history
of political turmoil, witnessed positive developments with the formation of a new government in December 2012. The Kuwaiti
4
Kuwait Quarterly Market Review
May 8, 2013
economy is sensitive to political instability; the country has seen eight governments in just six years due to strife between the
parliament and the cabinet. The sentiment remained bullish throughout the quarter, with investors relying on robust economic
fundamentals, government initiatives to foster growth, and emphasis to develop the real estate and financial services sectors. In
addition, low interest rates boosted overall credit growth in Kuwait. Separately, oil prices remained elevated during Q1 2013,
despite slow global economic growth.
In line with KSE, the Bloomberg GCC 200 Index (capitalization weighted index of the top 200 equities in GCC based on market
capitalization and liquidity) ended in the green in Q1 2013, with a return of 4.1%. During the quarter, GCC markets gained due
to high oil prices and signs of political stability in major parts of the region. The market sentiment was bullish amid emerging
economic growth, particularly in Saudi Arabia and the UAE. Most importantly, FY 2012 results were upbeat, indicating that
recovery from recessionary losses of 2009–10 has begun.
Exhibit 9: Equity Markets Returns in Kuwait
Exhibit 10: Bloomberg GCC 200 Index Returns
15%
15%
10%
10%
Returns
Returns
5%
5%
0%
0%
-5%
-5%
-10%
-10%
-15%
Q1 2012
Source: Bloomberg
5
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q1 2012
Source: Bloomberg
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Kuwait Quarterly Market Review
May 8, 2013
Kuwait Market Performance
Global growth contracts; bailout continues: The US economy unexpectedly
decelerated at an annual rate of 0.1% in Q4 2012, as the government slashed
spending and companies restocked at a slower rate. Also, destruction caused by
superstorm Sandy on the East Coast and uncertainty over the fiscal cliff restricted
growth. The Federal Reserve (Fed) maintained its stance of buying monthly bonds
worth USD85bn and keeping interest rates near zero until unemployment falls to
at least 6.5%. In addition, the Fed lowered its economic growth forecast and
expects it in the 2.3–2.8% range in 2013 compared to its December projection of
2.3–3%. The US’ trade deficit narrowed to USD38.5bn in December, its lowest
level in nearly three years, as exports rose from USD182.5bn in November to
USD186.4bn in December and imports fell from USD231.1bn to USD224.9bn over
the period. Separately, Fitch reiterated that failure to provide timely solution to the
debt ceiling will lead to striping the ‘AAA’ rating on government debt. The US
Congress has suspended the US debt ceiling until May 18 and the debt ceiling
limit will come into force on May 19.
The Eurozone contracted 0.6% QoQ in Q4 2012 (0.2% in Q2 2012 and 0.1% in
Q3 2012), shrinking for the third consecutive quarter. Meanwhile, Cyprus clinched
a last minute USD13bn bailout deal to prevent a total financial collapse.
Separately, big depositors, largely from Russia, faced huge losses, as new deal
terms agreed with the European Union entailed tough clauses. The European
Central Bank (ECB) lowered growth estimate for the Eurozone. It forecasts the
economy to contract 0.5% in 2013 before growing 1% in 2014. In addition, the
ECB held interest rates unchanged at 0.75%. On the data front, Eurozone’s
economic sentiment fell 1.1 points to 90.0 in March after four consecutive months
of gain, reflecting a downturn in the manufacturing and service sectors. The Markit
Composite Purchasing Managers' Index (PMI) fell to 47.3 in February from 48.6 in
January, marking a year below the 50 threshold for growth.
In Q1 2013, volume and value traded surged 55.01% QoQ and 34.30% QoQ,
respectively. The benchmark index surpassed Q4 2012 volumes; the average
volume aggregated 518.89mn compared to 340.07mn in Q4 2012. The Financial
Services sector reported the maximum trading volume (13,459.94 mn), followed
by Real Estate (11,712.30mn). In terms of value, Financial Services led with
KWD834.54mn, followed by Real Estate (KWD600.32mn).
Benchmark Index and Volume Traded
7,000
1,400
1,200
6,700
1,000
6,400
800
6,100
600
400
5,800
200
5,500
0
Mar-12 Jun-12 Sep-12 Dec-12 Mar-13
Volume
Index Level
Quarterly Volume traded
Q1-13
33.21
Q4-12
21.42
12.61
Q3-12
22.15
Q2-12
0
20
40
Volume
(bn)
Quarterly Value traded
Q1-13
2,508.60
Q4-12
1,867.85
1,207.41
Q3-12
1,782.80
Q2-12
Trading Statistics
Index Close
Volume traded (mn)
Value Traded (KWD mn)
No. of advances
No. of declines
No. of unchanged
6
Q1-13
6,721.52
33,209.27
2,508.60
128
53
17
Q4-12
5,934.28
21,424.52
1,867.85
77
104
17
Change (%)
13.27
55.01
34.30
66.23
(49.04)
0.00
Volume (mn)
Political stability and economic growth provide impetus: The newly formed
Kuwaiti government was successful in reinforcing confidence among investors.
Effective measures were taken to boost growth in real estate and banking sectors,
increase foreign investment and reduce bureaucratic hazards. The index
breached the 6,500 level and is on a growth trajectory. On the economic front,
Kuwait’s fiscal surplus stood at a record high of KWD17.2bn at the end of 10M
2012–13, with revenues of KWD27.0bn and expenditure totaling KWD9.8bn. Oil
prices remained at inflated levels despite a correction due to signs of global
economic recovery. On the other hand, the Kuwait Investment Authority (KIA)
received an additional USD700mn quota for direct investment in the Chinese
securities market, thereby reaching the USD1bn cap that a qualified foreign
institutional investor (QFII) can obtain in China. The KIA had received USD300mn
in March last year.
Kuwait Index Performance
Index Value
In Q1 2013, the Kuwait Stock Exchange (KSE) advanced 13.27% to end at
6,721.52. Separately, the UAE’s ADX index (up 14.99%) posted the biggest gain,
while Egypt’s CASE index (down 6.66%) was the biggest loser.
0
1,000
KWD mn
2,000
3,000
Kuwait Quarterly Market Review
May 8, 2013
Top Gainers and Losers
Markets were in positive mode. The breadth was in favor of gainers. There were 128 advances, 53 declines, and 17 stocks
remaining unchanged during Q1–13.
Top 5 Gainers
Close
Market
Cap
(USD
mn)
Stock Returns (%)
Company
Volume
Beta
BVPS
P/E
P/BV
(KWD)
(KWD)
(x)
(x)
(KWD)
Q4-12
1 year
3 year
385.00
187.31
250.00
434.72
184.00
4.40
1.95
NM
0.10
NM
3.68
146.00
151.72
110.01
206.59
117.48
1.98
1.34
0.02
NM
7.05
NM
Securities House
100.00
102.02
NM
(23.08)
238.26
2.49
1.12
NM
0.09
NM
1.15
Amwal Int. Invt.
70.00
97.18
NM
NM
44.28
0.10
1.04
NM
NM
NM
NM
Bayan Investment
Co.
67.00
94.20
88.73
(1.47)
92.17
7.99
1.60
NM
0.09
NM
0.73
Volume
Beta
BVPS
P/E
P/BV
(KWD) (KWD)
(x)
(x)
Equipment
Holding Co.
Gulf Petroleum
Investment
(mn)
EPS
Top 5 Losers
Close
Stock Returns (%)
Company
Kuwait Remal Real
Estate Co.
Industrial &
Financial
Investment
Kipco Asset
Management Co.
K.S.C.Closed
Gulf
Cable &
Electrical Ind.
Kuwait
Commercial Mrkts
Comp
Market
Cap
(USD
mn)
(mn)
EPS
(KWD)
Q4-12
1 year
3 year
255.00
(30.14)
(17.40)
NM
226.05
1.45
0.38
0.04
NM
6.38
NM
22.00
(22.81)
(12.00)
(54.64)
34.69
0.78
1.03
NM
0.06
NM
0.39
104.00
(22.39)
(52.50)
(70.45)
95.95
0.00
0.37
NM
NM
NM
NM
980.00
(22.22)
(26.13)
(36.37)
720.86
0.03
1.46
0.19
0.76
5.07
1.29
41.00
(21.15)
(21.15)
(70.71)
38.26
2.06
1.51
NM
0.10
NM
0.43
Top 5 by Volume
Close
Stock Returns (%)
Company
Investors Holding
Group Co.
Gulf Finance
House
National Ranges
Company
Munshaat Real
Estate Projects
Co K.S.C.C
Gulf Investment
House
Volume
Beta
(mn)
EPS
BVPS
P/E
P/BV
(KWD)
(KWD)
(x)
(x)
(KWD)
Q4-12
1 year
3 year
23.50
46.88
88.00
(12.96)
88.10
50.14
2.21
NM
NM
NM
NM
40.00
25.00
(35.48)
(85.92)
310.55
136.04
1.56
0.01
0.20
6.06
0.20
17.50
6.06
16.67
(47.76)
61.32
32.09
1.95
NM
NM
NM
NM
46.00
21.05
5.75
(13.21)
170.27
24.70
1.65
NM
NM
NM
NM
58.00
36.47
118.87
(17.14)
85.69
69.89
1.00
NM
0.05
NM
1.22
Source: Bloomberg, Gulfbase
7
Market
Cap
(USD
mn)
NM-Not Meaningful
Kuwait Quarterly Market Review
May 8, 2013
Sector-wise performance
Market Composition

Quarterly Sector Index Returns* (%)
Banking: The index ended the quarter above 500 at 501.68, with a return of
1.81%, reversing the previous quarter’s negative returns. Of the 11 banks,
seven closed in the green. Ithmaar Bank (up 25.53%) was the biggest gainer.
The bank was able to reduce net losses to USD30.46mn compared to
USD62.89mn for the same period last year. Kuwait International Bank (down
5.08%) lost the most.
Value traded stood at KWD382.71mn, accounting for 15.26% of total.
Volume traded aggregated 1,849.51mn. The sector accounted for 6.6% of
total deals in sectoral indices (33,237 deals).


21.76
Health Care
10.81
Financial Services
9.10
Basic Materials
8.49
6.98
525.57. Alkout Industrial Projects Co. (up 35.48%) was the biggest gainer.
The company announced a profit of KWD4.39mn at the end of 2012
compared to KWD3.68mn at the end of 2011, a 20% increase. Kuwait
Consumer Services
5.81
Insurance
4.54
Foundry Co. (down 6.49%) was the biggest loser. Value traded totaled
KWD24.82mn, while volumes stood at 101.69mn.
Real Estate
4.44
Industrials
3.88
Consumer Goods: The index rose 6.98% to breach the 600 mark and close
Banking
Holding Co. (up 56.16%) was the best performer. The company was able to
reduce losses to KWD0.22mn at the end of 2012 compared to KWD0.44mn at
the end of 2011. IFA Hotels & Resorts Co. (down 13.64%) was the biggest
loser. The company announced a net profit of KWD2.98mn at the end of 2012
vis-à-vis KWD1.48mn for 2011. The sector’s turnover totaled KWD63.34mn
and trading volume aggregated 259.40mn.
Financial Services: The Financial Services index reversed last quarter’s
losses and ended 9.10% higher at 513.71. The Securities House (up
102.02%) was the best performer. The company signed a Memorandum of
Understanding (MoU) with an investor to sell 95% stake in its subsidiary New
Technology Bottling Company to the latter for KWD14.9mn. Gulf Investment
House Co. (up 36.47%), one of the biggest gainers, was able to reduce its net
loss to KWD0.89mn at the end of FY 2012 compared to KWD5.93mn for the
same period last year. Industrial & Financial Investments Co. (down 22.81%)
was the biggest loser.
The sector was the highest contributor in terms of trading volume
(13,459.94mn or 40.53% of total) and value (KWD834.54mn or 33.27%). In
terms of number of deals, the sector accounted for 39.75% or 201,460 deals
in Q1 2013.
8
Oil & Gas
Consumer Goods
Consumer Services: Consumer Services grew 5.81% to end at 528.92. Zima

27.23
Basic Materials: The index extended last quarter’s gains by 8.49% to end at
at 626.95. Palms Agro Production Co. (up 31.25%) was the top performer.
The company announced that net profit increased 9% YoY to KWD0.49mn at
the end of 2012. The company also announced 10% cash dividend (10 fils)
for FY 2012. The sector’s total turnover stood at KWD14.32mn, while trading
volume aggregated 121.47mn.

Technology
Telecom
1.81
(0.16)
Quarterly Volume traded* (mn)
Financial Services
13,459.94
Real Estate
11,712.30
Industrials
Banking
Oil & Gas
3,637.73
1,849.51
1,442.54
Telecom
450.78
Consumer Services
259.40
Technology
160.30
Consumer Goods
121.47
Basic Materials
101.69
Health Care
7.98
Insurance
5.62
Kuwait Quarterly Market Review
May 8, 2013

Healthcare: The index reversed previous quarter’s losses to end at 490.51
(up 10.81%). Al-Mowasat Healthcare Co. (up 24.00%) was the biggest gainer.
The company’s net profit surged 3.4% YoY to KWD2.18mn at the end of 2012
compared to KWD2.11mn at the end of 2011. Value traded totaled
KWD2.85mn and volume stood at 7.98mn.

Industrials: It added 3.88% to close at 540.82. Equipment Holding Co. (up
187.31%) was the biggest gainer. United Projects Group (up 37.93%), one of
the biggest gainers, announced that its net profit rose 225% YoY to
KWD7.40mn at the end of 2012 compared to KWD2.27mn at the end of
2011. Gulf Cable & Electrical Ind. Co. (down 22.22%) was the biggest loser.
The company announced its net profit plunged 69% YoY to KWD11.42mn at
the end of 2012.
Market Composition
Quarterly Value traded* (KWD mn)
Financial Services
Real Estate

Insurance: The index expanded 4.54% to end at 509.07. Bahrain Kuwait
Insurance Co. (up 29.09%) was the biggest gainer, while Al Ahleia Insurance
Co. (down 10.71%) was the worst performer. Total value traded stood at
KWD0.95mn, while volumes aggregated 5.62mn.

Oil & Gas: The index gained 21.76% to close above 500 at 514.29 and was
the second best performer among sectoral indices. Gulf Petroleum
Investment Co. (up 151.72%) rose the most. Aref Energy Holding (up
58.90%), one of the biggest gainers, announced that its net loss has been
restricted at KWD9.96mn at the end of 2012 compared to a loss of
KWD5.11mn for the year-ago period. The sector’s total turnover stood at
KWD136.83mn and volume at 1,442.54mn.
600.32
Banking
382.71
Industrials
335.09
Oil & Gas
136.83
Telecom
96.92
Consumer Services
Value traded aggregated KWD335.09mn (13.36% of total) and volume
totaled 3,637.73mn (10.95%).
834.54
63.34
Basic Materials
24.82
Technology
15.90
Consumer Goods
14.32
Health Care
2.85
Insurance
0.95
Total Deals*
Financial Services
201,460
Real Estate
141,562
Industrials

Real Estate: The Real Estate index advanced 4.44% in Q1 2013. Munshaat
Real Estate Projects Co. (up 90.77%) was the top performer in the sector; the
company reported a profit of KWD9.83mn at the end of 2012 as against a loss
of KWD13.64mn in 2011.
Banking
Oil & Gas
Consumer Services
The sector’s turnover aggregated KWD600.32mn (23.93% of total), while
trading volume stood at 11,712.30mn (35.27%). In terms of total deals, the
sector ranked second with 141,562 deals (27.93% of total) during the quarter.

Technology: The index was the best performer in Q1 2013; it advanced
27.23% to end at 495.45. Future Communications Co. Global (up 79.31%)
rose the most. Al-Safat Tec Holding Company (up 36.51%), one of the
biggest gainers, announced that it has made a net profit of KWD1.1mn at the
end of 2012 as against a loss of KWD6.61mn in 2011. Total value traded
stood at KWD15.90mn and volume at 160.30mn.

Telecom: The index was the worst performer in Q1 2013 and ended at 514.11
(down 0.16%). National Mobile Telecommunications Co. (down 5.98%) was
the worst performer; the company’s net profit declined 79% YoY to
KWD75.5mn at the end of 2012 compared to KWD362.12mn at the end of
2011. Value traded totaled KWD96.92mn and volume stood at 450.78mn.
9
59,406
33,237
33,187
11,138
Telecom
9,938
Technology
7,553
Basic Materials
4,730
Consumer Goods
3,578
Insurance
597
Health Care
435
* Kuwait Stock Exchange has introduced the new
KSX 15 index, with effect from May 13, 2012. Under
the new classification, companies would be grouped
into 15 sectors.
Kuwait Quarterly Market Review
May 8, 2013
Company News

Agility announced its Iraqi unit won a three-year contract worth USD80mn from Shell Iraq Petroleum Development. The
unit would be coordinating all related freight forwarding services from different locations with the Majnoon oil field in Iraq.
The contract is expected to commence in May. (March 28, 2013)

Kuwait's Capital Markets Authority (CMA) announced it would delist Al Safat Investment Co. and Al-Ahlia Holding Co.
In addition, CMA warned Al Imtiaz Investment Co. that it would be delisted on June 30 if it fails to submit financial results
for 2012. The company has so far submitted results until Q1 2012. (March 26, 2013)

Kuwait Commercial Markets Complex Co. entered into an agreement with Bahrain's Ahli United Bank to settle
BHD22mn of its BHD26.5mn debt. The remaining BHD4.5mn will be repaid over seven years, starting from mid-2015.
(March 26, 2013)

S&P raised its long-term counterparty credit rating for Gulf Bank to 'BBB+' from 'BBB' and affirmed the short-term rating
at 'A-2'; the outlook remains positive. The upgrade was based on anticipation of the bank's capital measures remaining
strong over the next two years. Moreover, Gulf Bank’s credit-risk metrics have the potential to improve. (March 26, 2013)

Jazeera Airways plans to acquire a stake in Kuwait Airways, according to Marwan Boodai, Chairman of Jazeera Airways.
However, no bid has been made until date. If the plan materializes, Jazeera Airways would become the second budget
carrier in the world to have acquired a stake in a full-service carrier. AirAsia’s investment in Malaysian Air was the first
such acquisition. (March 24, 2013)

Kuwait Finance House (KFH) will offer about 639mn shares at KWD0.51 (USD1.76), each as part of its planned 20%
capital hike. The share price will comprise par value of KWD0.1 and an issue premium of KWD0.4 per share. The
subscription, which is expected to take place in H2 2013, will increase the bank's capital to KWD383.3mn. (March 20,
2013)

Kuwait Oil Company (KOC) announced it has controlled a small leak on a gas pipeline near to the Burgan oil field. A
leak was discovered on an isolation valve on a gas pipeline running near the security fence around Burgan, one of the
world's biggest oil fields. (March 18, 2013)

Kuwait International Bank announced plans to swap its entire 8.56% stake in Warba Insurance Co. against the local
insurer's 33.6% interest in Shariah-compliant Ritaj Takaful Insurance Co. The swap deal will raise its stake in Ritaj from
the current 40% to 73.6%. (March 14, 2013)

S&P revised its outlook on Burgan Bank to ‘stable’ from ‘negative’ on improved asset quality and financial performance.
In addition, it affirmed ratings of ‘BBB+’ for long-term and ‘A-2’ for short-term counterparty credit. S&P opined that this
trend is expected to continue in 2013, allowing the bank to maintain capitalization at current levels. (March 14, 2013)

Gulf Investment Corp. will invest USD50mn in Richard Branson’s Virgin Mobile’s Middle East operations. Virgin Group
and GIC will be the largest joint shareholders in Virgin Mobile Middle East & Africa (VMMEA), which holds mobile virtual
network operator (MVNO) licenses in Oman, Jordan and South Africa. (March 13, 2013)

Burgan Bank Group won the 'Best Banking Group in MENA' award for the second consecutive year from Global Banking
and Finance Review. The award comes in recognition of the bank’s performance in 2012 and consistent results across
operations in Kuwait, Jordan, Algeria, Iraq, Turkey, Tunis, Cyprus and Lebanon. (March 13, 2013)

Kuwait Finance House (KFH) announced that its real estate investment activities will be consolidated into one entity,
KFH Real Estate Company. The company's overall strategy is to club businesses into similar dedicated investment
vehicles. (March 11, 2013)

Contracting and Marine Services Co.’s 51%-owned subsidiary Kuwait Drilling Co. was awarded five deals worth
KWD94.38mn by Kuwait Oil Co. Among the contracts, the drilling contracts are for five years and can be renewed for a
year. Two contracts, valued at KWD32.82mn, are renewals of existing deals. (March 11, 2013)

Jazeera Airways issued its December 2012 and FY 2012 performance reports. As per the report, the airlines grabbed a
41% market share on the Kuwait-Amman route in December 2012 and a 17% market share on the Kuwait-Dubai route.
The airline carried a total of 1.1mn passengers in 2012. Its on-time performance (OTP) for December and the year 2012
was 93.71%. (March 11, 2013)

National Bank of Kuwait (NBK) has been listed among the world’s 50 safest banks by international finance magazine
th
Global Finance for the seventh consecutive time. NBK was ranked 35 in the list, mainly due to its conservative strategy,
prudent risk management and service excellence. (March 06, 2013)

Kuwait Finance House (KFH) announced that the three-year deposit (Kuwaiti Dinar) the bank offers yielded 0.9% in
returns in Q4 2012. Returns on three-year US dollar denominated deposits stood at 0.61% in Q4 2012, 0.63% for the past
six months, 0.65% for nine months and 0.67% as annual returns. KFH’s distributed returns on deposits (in the EU) stood
10
Kuwait Quarterly Market Review
May 8, 2013
at 0.14% by the end of Q4, and reached 0.15% for six and nine months, and annual returns. Deposits in sterling pound
reached 0.84% by the end of Q4 2012, 0.87% for six months, 0.90% for nine months, and 0.92% for annual returns.
(March 03, 2013)

Combined Group Contracting Co. has been awarded a deal worth KWD14.9mn (USD52.67mn) to construct multipurpose buildings. The project is expected to result in a loss margin, representing 3.3% of the project's value by the end of
the first year of implementation and a profit margin of 7.3% by the end of the second year. (February 28, 2013)

Zain Kuwait and Huawei announced plans to launch a joint innovation center, which will serve as a research hub for the
development of Long-Term Evolution (LTE) mobile broadband technology and associated LTE applications for Zain's
mobile customers in Kuwait and across the region. (February 27, 2013)

Al Safwa Group Holding Co.’s shareholders approved a proposal to reduce capital to KWD21.88mn (USD77.45mn)
from KWD130mn currently. The multi-line conglomerate will use KWD108mn of the capital reduction and its Treasury
stock reserves (valued at KWD3.36mn) to write off accumulated losses of nearly KWD111.4mn. (February 24, 2013)

Kuwait Oil Co. (KOC) has drilled more than 700 wells to produce 0.06mn barrels per day of heavy oil by 2016–17. In
addition, KOC has completed the front-end engineering designs (FEED) for building the facilities required for producing
and transporting the targeted output. (February 12, 2013)

Global Investment House plans to voluntarily delist shares from the local bourse on June 19. The company's shares
have been suspended from trading on the Kuwait Stock Exchange for more than a year after its accumulated losses
surpassed the regulatory threshold of 75% of capital. (January 31, 2013)

Mashaer Holding Co. announced its unit Masaa Real Estate Co. has acquired 65% of a commercial complex project in
Egypt for USD16.15mn. The complex is under construction in New Cairo and the stake was purchased through Masaa
Real Estate-Egypt. (January 30, 2013)

Kuwait Finance House (KFH) aims to expand presence in foreign markets by constructing investment entities that
generate good returns, according to CEO Mohammed Al-Omar. He stressed that the volume of trade exchange between
Kuwait and Canada exceeded USD186mn in 2011, up 43% from the preceding year. He also added that there are some
Canada-based companies active in Kuwait, especially in the field of energy. (January 27, 2013)

The East India Company will launch its franchise store in February in Kuwait. The Company, well known for its tea,
coffee, confectionaries and other ranges of chocolates, will have its franchise operated by Al Maousherji Group in Kuwait.
(January 25, 2013)

The Kuwait National Assembly approved a law to privatize Kuwait Airways. According to the new legislation, the name
will be changed to Kuwait Airways Company (KAC). The new entity will be a shareholding firm, which would own all
assets and properties of KAC, while its dues on Iraqi Airways and government will return to the state treasury. (January
23, 2013)

Combined Group Contracting Co. has been awarded a deal worth USD20.96mn for infrastructure works in the UAE.
The deal includes excavation, filling and road paving works. It added that the project is expected to start this month and
be complete after 12 months. (January 22, 2013)

Alafco Aviation Lease and Finance Co. sold two Boeing B777-200ER aircraft to China Southern Airlines Co. after
expiry of the lease contract. The company did not disclose the deal value. (January 15, 2013)

IFA Hotels and Resorts opened a USD330mn hotel in Dubai and expects to generate an operating return on investment
of 8% in the first three years, or KWD7.44mn (USD26.4mn) annually. Fairmont Palm is a five-star hotel with a beachfront
of 460 meters, and it offers meeting and conference halls, a spa, restaurants, and other facilities. (January 10, 2013)

The GDF SUEZ-led consortium has officially been awarded a contract for the construction and operation of a gas-fired
combined cycle power plant of at least 1,500MW and an associated water desalination plant with a capacity of 102–107
MIGD (464–486 thousand m³/day). The project will be jointly owned by the consortium, Kuwaiti public entities, and Kuwaiti
nationals via an Initial Public Offering. (January 08, 2013)

Capital Standards Rating Co. (CSR) assigned Insurer's Financial Strength Rating (IFSR) 'BB-' and national rating of 'BBBkw' to First Takaful Insurance Co. (FTIC). The outlook for the rating is stable. This is a solicited, first-time rating
assigned by CSR to the company. CSR's ‘BB-’ rating reflects FTIC's strong market share, conservative reserving strategy,
and robust reinsurance program. (January 08, 2013)

Mushrif Trading and Contracting Co. has been awarded a deal worth KWD11.43mn (USD40.57mn) by Joint
Operations-Wafra. The 36-month contract will involve replacing oil pipelines and supporting production operations.
(January 03, 2013)
11
Kuwait Quarterly Market Review
May 8, 2013
Earnings Summary (Q4-12)
KUWAIT
S. No.
Company
Net Income
Change
USD Mn
Q4-12
Q3-12
Q4-11
QoQ (%)
YoY (%)
1
National Bank of Kuwait SAK
14,973.20
268.09
380.33
270.34
(29.51)
(0.83)
2
Mobile Telecommunications Company
KSC
11,095.21
176.63
208.86
260.93
(15.43)
(32.31)
3
Kuwait Finance House KSC
8,080.75
41.35
118.14
33.42
(65.00)
23.73
4
Boubyan Bank KSC
4,202.49
8.51
8.48
3.98
0.35
113.82
5
Gulf Bank KSC
3,992.48
29.71
33.76
11.22
(12.00)
164.80
6
National Mobile Telecommunications
Co.
3,728.06
44.12
54.43
60
(18.94)
(26.47)
7
Ahli United Bank
3,484.01
33.58
29.64
25.76
13.29
30.36
8
Al Ahli Bank of Kuwait
3,250.65
(1.15)
32.25
36.79
(103.57)
(103.13)
9
Burqan Bank SAK
3,142.50
32.33
53.33
32.15
(39.38)
0.56
10
Commercial Bank of Kuwait SAK
3,136.15
46.63
(44.29)
(26.23)
205.28
277.77
11
Mabanee Co SAKC
2,775.59
41.89
25.29
14.99
65.64
179.45
12
Kuwait Food Company Americana
2,690.21
51.15
21.97
34.87
132.82
46.69
13
Agility Public Warehousing Co.
2,249.12
33.81
34.18
93.97
(1.08)
(64.02)
14
Kuwait Projects Company Holding
2,051.32
26.74
23.11
22.53
15.71
18.69
15
Kuwait International Bank KSC
1,096.08
13.24
11.99
9.37
10.43
41.30
16
Aviation Lease & Finance Company
933.79
39.66
12.05
53.02
229.13
(25.20)
17
Jazeera Airways Company KSC
710.06
8.85
26.86
4.59
(67.05)
92.81
18
Commercial Facilities Co SAK
652.24
11.9
10.49
19.46
13.44
(38.85)
19
IFA Hotels and Resorts Company KSCC
615.47
(7.95)
(3.24)
(12.46)
145.37
(36.20)
20
The Commercial Real Estate Co.
594.54
23.45
9.33
11.06
151.34
112.03
Source: Reuters
12
Market
Cap
Kuwait Quarterly Market Review
May 8, 2013
Other GCC Markets
S. No.
Company
Market
Cap
Net Income
Change
USD Mn
Q4-12
Q3-12
Q4-11
QoQ (%)
YoY (%)
BAHRAIN
1
Ahli United Bank B.S.C
3,187.24
78.55
87.22
70.30
(9.94)
11.74
2
Aluminium Bahrain BSCC
1,619.76
139.49
(34.48)
75.50
(504.55)
84.75
3
Bahrain Telecommunications Co.
1,588.33
47.09
21.29
62.37
121.18
(24.50)
4
Gulf Finance House BSC
1,414.89
2.48
1.80
(3.76)
37.78
(165.96)
5
National Bank of Bahrain BSC
1,247.97
27.77
31.65
25.73
(12.26)
7.93
1
Bank Muscat SAOG
3,367.78
90.97
93.03
78.99
(2.21)
15.17
2
Bank Dhofar
1,244.80
23.42
24.07
21.40
(2.70)
9.44
3
HSBC Bank Oman SAOG
992.44
(12.39)
8.63
11.69
(243.57)
(205.99)
4
Omani Qatari Telecommunications Co.
946.90
26.64
18.82
30.96
41.55
(13.95)
5
Raysut Cement Company SAOG
828.64
14.08
14.06
8.41
0.14
67.42
OMAN
QATAR
1
Industries Qatar Q.S.C.
26,506.66
490.07
719.68
463.05
(31.90)
5.84
2
Qatar National Bank SAQ
25,563.53
587.29
580.10
550.55
1.24
6.67
3
Ezdan Holding Group
11,366.28
40.60
17.27
39.5
135.09
2.78
4
Ooredoo QSC
9,907.44
293.56
175.98
169.26
66.81
73.44
5
Masraf Al Rayan (Q.S.C.)
5,067.99
413.17
98.40
108.75
319.89
279.93
SAUDI ARABIA
1
Saudi Basic Industries Corporation
78,597.91
1,571.55
1,683.24
1,404.32
(6.64)
11.91
2
Al Rajhi Bank
26,699.29
509.59
498.44
506.39
2.24
0.63
3
Saudi Telecom Company
20,959.44
104.91
520.98
623.08
(79.86)
(83.16)
4
Kingdom Holding Company
17,886.58
55.89
58.07
50.08
(3.75)
11.60
5
Etihad Etisalat Company
16,888.22
500.63
403.01
452.60
24.22
10.61
1
Emirates Telecommunication Corp Ltd
21,075.29
232.59
602.38
191.69
(61.39)
21.34
2
DP World Limited
12,782.00
501.80
246.81
198.20
103.31
153.18
3
National Bank of Abu Dhabi
12,719.95
305.06
306.21
197.08
(0.38)
54.79
4
First Gulf Bank PJSC
12,252.90
1,131.03
287.02
278.11
294.06
306.68
5
Emaar Properties PJSC
8,873.90
139.34
105.50
195.12
32.08
(28.59)
UAE
Source: Reuters
13
Kuwait Quarterly Market Review
May 8, 2013
GCC Performance
MENA
Index
Close
Returns (%)
Market
Cap
P/E
P/BV
Div.
Yield
Q4-12
1 year
3 year
5 year
(USD bn)
(x)
(x)
(%)
Bahrain (BAX)
1,091.58
2.44
(5.28)
(29.44)
(60.87)
15.7
9.48
0.85
4.46
Kuwait (KSE)
6,721.52
13.27
9.03
(10.78)
(52.96)
103.4
23.11
1.27
3.00
Oman (MSM)
5,989.68
3.97
5.27
(10.57)
(40.71)
16.1
10.99
1.56
4.67
Qatar (DSM)
8,577.72
2.62
(2.42)
14.94
(10.23)
101.6
10.91
1.55
4.99
Saudi Arabia (TASI)
7,125.73
4.77
(9.05)
4.77
(20.76)
387.2
14.89
1.86
3.63
UAE (ADX)
3,025.33
14.99
18.50
4.02
(33.60)
79.5
9.42
1.08
5.48
UAE (DFM)
1,829.24
12.74
10.94
(0.77)
(65.82)
36.9
12.31
0.77
3.97
Egypt (EGX)*
5,098.82
(6.66)
1.60
(25.08)
(55.11)
26.8
19.06
1.24
5.21
Jordan (ASE)*
2,101.36
7.34
5.57
(16.54)
(46.47)
25.0
13.77
1.16
4.06
Lebanon (BSE)*
1,203.50
2.94
(1.70)
(25.40)
(21.64)
30.8
7.18
0.93
4.45
Tunisia (TSE)*
4,725.73
3.19
(1.95)
0.84
73.16
8.8
23.26
2.04
1.24
Source: Zawya, Bloomberg

*P/E, P/BV and Dividend yield for benchmark index
Bahrain’s BAX added 2.44% to end at 1,091.58 in Q1 2013 after falling 2.00% in Q3 2012. Market capitalization
increased 3.3% QoQ due to positive investor sentiment. The Services sector (up 7.05%) was the best performer.
Investors considered small-cap stocks as an attractive option and buying activity was witnessed in those stocks. Among
stocks, Al Salam Bank (up 47.17%) was the biggest gainer. During the quarter, Bahrain announced that GDP would
expand 6.2% in 2013 before easing to 3.4% in 2014. The estimated GDP grew 3.9% in 2012, up from 1.9% in 2011.

Qatar’s DSM advanced 2.62% to close at 8,577.72 after shedding 1.78% in Q4 2012. With the exception of Real Estate
(down 5.38%), other sectoral indices ended in the green. Industrial (up 14.32%) rose the most, followed by Consumer
Goods & Services (up 11.13%). On the economic front, the country posted a trade surplus of QAR96.7bn in Q4 2012,
with exports of QAR120.44bn and imports of QAR23.75bn.

Kuwait’s KSE reversed previous quarter’s losses and added 13.27% to close at 6,721.52 in Q1 2013 after advancing
9.03% in the previous year. Technology (up 27.23%) was the biggest gainer, followed by Oil & Gas (up 21.76%). Market
cap rose to USD103bn during the quarter. After the formation of the new government in December 2012, the government
exhibited intentions to increase investment in the country and foster developmental plans. On the economic front, a
budget surplus of KWD17.2bn (USD60.5bn) was posted in the first 10 months of FY2012–13. Income totaled KWD27bn,
higher than the forecasted KWD13.9bn. Oil revenues aggregated KWD25.5bn (94% of total income). The government
spent KWD9.8bn in the 10 months to the end of January compared to KWD21.2bn originally earmarked for the period.

Saudi Arabia’s TASI gained 4.77% to close at 7,125.73 in Q1 2013. Hotel & Tourism (up 38.64%) added the most.
Among stocks, Saudi Indian Co. for Cooperative Insurance (up 116.34%) was the biggest gainer. The Saudi Monetary
Agency (SAMA) announced that the kingdom’s budget surplus totaled USD102bn in 2012, while GDP growth was
estimated at 6.8%. Separately, there were reports that the Kingdom’s current account balance is estimated at USD117bn
(SAR438.75bn) in 2013, 16.1% relative to GDP.
14
Kuwait Quarterly Market Review
May 8, 2013

Oman’s MSM grew 3.97% to close at 5,989.68 in Q1 2013. All sectoral indices ended in the green, with Industrial (up
10.01%) being the biggest gainer, followed by Banking & Investment (up 9.78%). Al Anwar Holding Co. (up 56.39%)
advanced the most among stocks.

The UAE’s ADX and DFM rose 14.99% and 12.74%, respectively, during Q1 2013. On ADX (the best performer among
MENA indices), Investment & Financial Services gained 32.73%, followed by Real Estate (up 21.09%). Money supply
(currency in circulation plus currency at banks) in the UAE surged 1.9% to AED57.8bn at the end of December from
AED56.7bn at the end of November 2012. Money supply aggregate M1 (currency in circulation plus monetary deposits,
including current and call accounts at banks) also increased 1.9% to AED299.2bn. Meanwhile, the IMF opined that the
UAE will grow 3.1% in 2013, as the non-oil sector is expected to grow in 2013.

The Egyptian Stock Exchange (EGX), the worst performer among MENA indices, continued its downtrend and declined
6.66% to close at 5,098.82 (6.17% in Q4 2012). Market capitalization decreased to USD26.8bn from USD32.7bn in Q4
2012. Moody’s downgraded Egypt's government bond ratings to ‘Caa1’ from ‘B3’ due to deterioration of government
finances and unsettled political scenario. Repeated incidents of civil unrest have dented the country’s GDP growth. In
addition, the budget deficit has widened significantly. Moody's has lowered the country ceiling for foreign-currency bank
deposits by one notch to ‘Caa2’.

Jordan’s Amman Stock Exchange (ASE) added 7.34% to close above 2,000 at 2,101.36 in Q1 2013. Market capitalization
improved to USD25.0bn from USD24.4bn in the previous quarter. The government approved a JOD7.5bn (USD10.5bn)
budget for 2013. Public revenues are estimated at around JOD6.15bn, while current spending is projected at JOD6.2bn
and capital expenditure to increase 76.6% to JOD1.25bn. The budget deficit is JOD2.16bn without foreign grants and
JOD1.31bn after adding foreign aid. Jordan's economy is expected to grow 3.5% in 2013 from an estimated 3% in 2012,
while inflation is projected to fall to 3.9% from 4.5% in 2012, according to the IMF.

Lebanon’s Beirut Stock Exchange (BSE) extended previous quarter’s gains to end 2.94% higher at 1,203.50 in Q1 2013.
Market capitalization rose marginally to USD30.8bn. The country’s Balance of Payment (BoP) deficit reduced to
USD1.54bn in 2012 compared to a deficit of USD2bn in 2011. However, on the down side, the country’s GDP growth
slowed to 0.8% in 2012 from 1.8% in 2011, as the political instability adversely affected trade and foreign investments.

The Tunisian Stock Exchange (TSE) grew 3.19% to end at 4,725.73 in Q1 2013. Market capitalization remained flat at
USD8.8bn. The World Bank has predicted higher growth rate for Tunisia for the next three years, i.e., from 3.2% in 2013
to 4.5% in 2014 and 4.8% in 2015. It is estimated that the economy grew about 2.5% in 2012. Separately, Foreign Direct
Investment (FDI) and portfolio investment in the country surged 79.2% to TND3.08bn compared to TND1.72bn in 2011.
15
Kuwait Quarterly Market Review
May 8, 2013
International Markets’ Performance
Advanced Economies
Index
Q4-12
1 year
3 year
5 year
(USD bn)
(x)
(x)
Div.
Yield
(%)
Close
Returns (%)
Market Cap.
P/E
P/BV
DJIA
14,578.54
11.25
10.34
34.28
18.88
4,286.2
14.20
2.88
2.44
Nasdaq
2,818.69
5.93
2.30
43.93
58.18
3,394.4
17.30
3.42
1.42
FTSE
6,411.74
8.71
11.15
12.89
12.45
1,779.6
18.17
1.82
3.72
DAX
7,795.31
2.40
12.21
26.68
19.29
790.8
14.60
1.47
3.30
CAC
3,731.42
2.48
8.98
(6.10)
(20.73)
983.2
14.39
1.22
3.78
Nikkei 225
12,397.91
19.27
22.95
11.79
(1.02)
237,713.2
24.96
1.50
1.59
Hang Seng
22,299.63
(1.58)
8.48
4.99
(2.41)
13,114.1
10.61
1.43
3.21
MICEX
1,438.57
(2.45)
(5.19)
(0.80)
(11.66)
19,719.6
5.41
0.76
3.95
Shanghai (SHCOMP)
2,236.62
(1.43)
(1.16)
(28.06)
(35.59)
15,736.4
12.24
1.59
2.55
Bovespa (IBOV)
56,352.09
(7.55)
(12.65)
(19.92)
(7.57)
1,518.6
102.05
1.13
4.72
NSE
5,682.55
(3.77)
7.31
8.26
20.02
37,477.0
15.58
2.54
1.54
ISE National - Turkey
84,659.00
9.66
35.38
50.88
119.76
601.0
13.04
1.81
1.83
Emerging Economies
Source: Bloomberg
*Indicates market capitalization of benchmark index
Six of seven equity markets in advanced economies ended Q1 2013 in the green vis-à-vis five during the previous
quarter. Emerging markets had a tough quarter, with four of five indices declining vis-à-vis growth in all indices during the
previous quarter.

Leading US indices grew during Q1 2013, with the Dow Jones Industrial Average (DJIA) advancing 11.25% (down 2.48%
in Q4 2012) and Nasdaq rising 5.93% (down 4.94% in Q4 2012). Investors remained bullish on the Federal Reserve’s
stance to continue its USD85bn monthly bond buying program and hold interest rates near zero until unemployment falls
to at least 6.5%. The US’ trade deficit narrowed to USD38.5bn in December, its lowest in nearly three years, as exports
rose from USD182.5bn in November to USD186.4bn in December, and imports fell from USD231.1bn to USD224.9bn
during the period. February US housing starts grew at its fastest space in over four years, as US builders constructed
homes at a seasonally adjusted annual rate of 0.92mn. Single-family home construction increased to an annual rate of
0.62mn. The Markit Flash US Manufacturing Purchasing Managers' Index (PMI) rose 1.1% to 54.9 in March. Separately,
economic growth was revised upward to an annual pace of 0.1% for the last three months of 2012 (preliminary estimate:
0.1%).

FTSE, DAX and CAC—the three key indices in Europe—ended Q1 2013 in the green. During the quarter, Cyprus was
successful in securing a USD13bn bailout deal, which prevented the country from a total financial collapse. The European
Central Bank (ECB) held interest rates unchanged at 0.75%. Among the positives, the Markit Composite Purchasing
Managers' Index (PMI) in the Euro area rose to a 10-month high of 48.6 in January from 47.2 in December to beat the
estimate of 48.2. Separately, trade surplus widened to EUR13.7bn (USD18.3bn) at the end of November 2012, up from
an adjusted EUR9.3bn in October and EUR4.9bn in November 2011.

Japan’s Nikkei continued to be the best performer among advanced economies; the index gained 19.27% to end at
12,397.91. Japan’s government unveiled a YEN10.3tn (USD116bn) economic stimulus package that will help lift the GDP
by 2% and create 0.6mn jobs. Out of the 10.3tn, YEN3.8tn will go toward rebuilding the Tohoku region devastated by the
16
Kuwait Quarterly Market Review
May 8, 2013
earthquake and tsunami and strengthening disaster prevention; YEN3.1tn will be allocated for wealth creation through
measures to improve competitiveness of the Japanese industry and stimulate innovation; and YEN3.1tn will go toward
social security such as healthcare and education as well as regional revitalization. An additional YEN2.8tn will be directed
toward the government’s contribution to the national pension scheme, bringing the total of the supplementary budget that
will fund the stimulus program to YEN13.1tn. On the data front, Japan’s GDP rose at a price-adjusted 0.2% in annualized
terms in Q4 2012. The country’s unemployment rate was recorded at 4.2% in January, down from revised 4.3% in
December. The number of unemployed people declined 6.2% YoY to 2.73mn in January.

Hong Kong’s Hang Seng (down 1.58%) was the worst performer among advanced economies. The index fell on concerns
of slowing economic growth in China. China’s GDP slowed to 7.8% YoY in 2012 (slowest since 1999) compared to 9.3%
in 2011 and 10.4% in 2010.

Turkey’s ISE National surged 9.66% and was the best performer among emerging markets. The country’s current
account deficit stood at USD5.6bn in January 2013, a USD99mn decline over January 2012. This is mainly ascribed to a
USD7mn decrease in foreign trade deficit to USD5.8bn as well as a USD83mn rise in net services income to USD752mn.
In addition, the Central Bank of Turkey announced that current account deficit for FY 2012 decreased to USD46.9bn from
USD48.9bn.

China’s Shanghai reversed the previous quarter’s gains and lost 1.43% during the quarter. The HSBC Flash China
manufacturing purchasing managers' index (PMI) for February slipped to 50.4 (lowest in four months) from January's final
reading of 52.3. Separately, the country’s trade surplus narrowed in February to USD15.25bn from USD29.15bn in
January. However, exports rose 21.8% in February, a positive signal for economic growth.

India’s NSE fell 3.77% during the quarter and rose by a mere 7.31% during last year. India has been grappling with huge
deficit and it posted the second highest ever monthly trade deficit of USD20bn in January, as imports surged to record
highs. Exports rose an annual 0.8% to USD25.59bn in January on better sales of engineering goods, drugs and gems.
However, imports rose 6% to USD45.58bn. Imports of oil, the single biggest item, surged 6.9% YoY to USD15.9bn.

Brazil’s Bovespa fell 7.55% and was the worst performer among emerging market indices. The country’s GDP expanded
0.9% in 2012 (2.7% in 2011), the worst annual result since 2009. The service sector, up 1.7%, posted the best
performance last year. Industrial output dropped 0.8% and agricultural production fell 2.3%.

Russia’s MICEX dropped 2.45% during the quarter. The country’s GDP growth slipped further in Q4 2012, as growth in
domestic spending weakened again and Europe's debt problems weighed on export demand. Russia’s GDP grew 2.1%
YoY in the fourth quarter from 3% YoY in the third. In FY 2012, GDP increased 3.4% from 4.3% a year earlier. Similarly,
industrial production unexpectedly contracted in January for the first time in more than three years. Output at factories,
mines and utilities shrank 0.8% YoY, the first decline since October 2009 compared to a 1.4% advance in December.
17
Kuwait Quarterly Market Review
May 8, 2013
Key regulatory changes
The UAE

In March 2013, the UAE Central Bank announced new mortgage guidelines as recommended by the UAE
Banks Federation. Under the new rules, citizens will be able to borrow up to 80% of a property’s value, while
expatriate mortgages will be capped at 75%. Second homes will be capped at 15% less. The Central Bank
also warned banks against delaying customers from switching to cheaper loans, mandating severe penalties
for such practices.

In March 2013, the Minister of Economy Sultan bin Saeed Al Mansouri announced that the UAE’s new
companies’ law is expected in Q2 2013. It aims to protect the business community and their investments. In
addition, it is anticipated to help upgrade the UAE’s status from a frontier market to an emerging market. The
current companies’ law dates back to around 30 years, while the new draft law has been under discussion at
the Federal National Council (FNC) for more than 10 years.
Qatar

In January 2013, Qatar’s Ministry of Business and Trade completed a new draft company law that aims to
improve business conditions, thereby attracting more foreign investment. One of the major features of the
new law is that it reduces the minimum nominal value for a share of a joint stock company from QAR10 to
QAR1, which would allow new companies to have a larger shareholder base and raise more capital. Another
feature of the law is reduction of the period of incorporation. Qatar’s previous set a minimum capital
requirement for new limited liability companies will be eliminated. This would benefit small and medium-sized
enterprises (SMEs) as it would not be necessary for them to generate significant investment before entering
into business.
Saudi Arabia

In March 2013, Saudi Arabia came up with a new labor law tightening labor restrictions on foreigners working
in the Kingdom. According to the new law, foreign workers cannot work for anyone other than their sponsor—
a Saudi Arabian individual or company that originally brought them to the country—and cannot start their own
business. Migrant workers violating these laws would be deported.

In February 2013, Saudi Arabia’s King Abdullah Abdulaziz al Saud replaced the Chairman of the Capital
Market Authority (CMA) Abdulrahman al-Tuweirji; the new chairman is expected to open up the GCC’s largest
stock exchange to foreign investors. Although no specific reason was given for the replacement, there were
talks that he failed to give a speedy solution to the regulatory framework to the Kingdom’s investment
problems. Mr. Al-Sheik, who worked in a US-based law firm Latham & Watkins and is Executive Director of
the World Bank, has been given the task of reforming the exchange and opening the market to direct foreign
investment within a year. Opening the stock market to foreign investors could earn Saudi Arabia the MSCI
frontier-market status, as it will allow the Kingdom to tap a wide international pool of money.
Kuwait

18
In March 2013, the Kuwait National Assembly approved a proposal to reduce the percentage of non-Kuwaitis
Kuwait Quarterly Market Review
May 8, 2013
in government jobs to 20% from the current ceiling of 28%. About 0.39mn are employed in the public sector,
of which 0.11mn, or 28%, are expatriates. Thus, about 30,000 expatriates working in the government must be
dismissed and replaced by Kuwaitis. In addition, there is a proposal that Civil Service Commission need to
find jobs for Kuwaitis within six months of applying, or else they had to be alternatively paid the salaries
expected from the sought job.
Muscat

In February 2013, the parliament approved a higher minimum wage and curbs on the employment of
foreigners, aiming to prevent joblessness among the nationals. The private sector’s minimum wage for Omani
citizens will be raised by more than 60% to USD844 per month, effective from July 1. It also approved
restricting the number of foreign workers in Oman to 33%, but without any timeframe. Expatriates represent
about 39% of Oman’s population and are mainly workers undertaking skilled or strenuous jobs in the oil,
construction and services industries.
Bahrain

19
In March 2013, the Central Bank of Bahrain (CBB) announced it would come up with a set of tougher
regulations that will lead smaller banks to merge and survivors to reduce profit expectations. There are 405
registered financial institutions in Bahrain and the financial sector contributes 23% to Bahrain's GDP
compared to 6% across GCC. The CBB plans to introduce a new concept to classify banks that are
domestically important financial institutions, which would face tougher regulations, but were more likely to be
able to meet them. Some of the requirements will vary depending upon the nature and size of the business,
and the size of market control. The CBB hinted that these requirements include increasing the level of capital
relative to debt.
Kuwait Quarterly Market Review
May 8, 2013
Kuwait Macroeconomic Snapshot
Key Indicators
2010A
2011A
2012F
2013F
2014F
Average Brent Crude Spot (USD / barrel)
61.88
79.65
110.90
112.00
104.50
GDP at Current Market Prices (KWD bn)
30.49
34.37
44.41
47.99
48.36
GDP at Current Market Prices (USD bn)
105.99
119.90
160.93
171.45
171.57
Real GDP Growth Rate (%)
(7.80)
11.40
9.30
5.00
4.60
3.50
3.60
3.70
3.80
4.00
38,441.00
42,198.00
45,592.00
47,247.00
48,615.00
2.10
6.00
3.10
2.60
3.90
Trade Balance (USD bn)
35.90
47.56
82.32
88.20
79.25
Current account Balance (USD bn)
28.28
38.29
70.76
76.20
67.86
Current Account (% of GDP)
26.70
30.80
42.01
44.40
39.60
Total International Reserves (USD bn)
20.38
21.35
25.91
29.00
31.06
Public sector Balance (USD bn)
22.36
18.46
47.96
51.95
39.46
Public sector Balance (% of GDP)
21.10
15.40
29.80
30.30
23.00
Net public debt (% of GDP)
11.00
10.90
7.50
7.00
6.80
KWD/USD Exchange Rate (end period)
0.29
0.28
0.28
0.28
0.28
Stock of Money M2 (YoY% Change)
13.40
3.00
8.20
6.50
8.40
Benchmark Lending Rate (end of period %)
6.20
4.90
5.20
5.00
4.90
Real Sector
Population (mn)
GDP / Capita (USD)
CPI Inflation (YoY % Change)
External Sector
Fiscal Sector
Financial Sector
Source: Economic Intelligence Unit
20