GCC markets were mixed during 2023, with the S&P GCC Composite index registering a yearly gain of 6.2% as only Dubai and Saudi Arabia equity indices ended the year on a positive note. 

 

Within the GCC, Dubai and Saudi Arabia equity indices surged 21.7% and 14.2% respectively during the year on the back of positive investor sentiment and strong earnings growth from major blue-chip stocks, said Kuwait Financial Centre (Markaz), which released its Monthly Market Review report for December 2023. 

 

Dubai’s performance was driven by a strong economic outlook supported by real estate and tourism sectors in addition to the relative undervaluation of the markets compared to GCC peers. Emaar Developers and Emaar Properties surged with total returns of 77.5% and 40.9% respectively during the year. Emaar Properties and its construction unit reported results in line with the market’s high expectations, with a 42% and 43% increase in their 9M profits respectively on higher retail sales and a rise in real estate demand. 

 

Saudi Aramco

Saudi Aramco recorded a total return of 18.5% in 2023 supported by high oil prices and strategic investments made by the company across the world. Abu Dhabi index fell the most at 6.2% for the year dragged down by the performance of major blue-chip stocks. Qatar equity index gained 1.4% for the year despite the drastic fall in natural gas prices.

 

Global equities rallied in 2023 due to the decline in inflation from the highs of 2022 and the indication from Fed's last two meetings that the rate hike cycle could be over with a pivot likely in H2 2024. 

 

Kuwait equities, which were among the top performers in 2022, fell in 2023 due to the expected decline in oil GDP and challenging operating environment for banks (Banking stocks account for more than half of Kuwait’s equity markets by market capitalisation). Kuwait’s All Share Index posted a yearly fall of 6.5%, driven down by the banking index, which fell by 8.2%. 

 

Insurance consumer staples

Insurance and Consumer Staples gained the most for the year, rising 47.8% and 37.2% respectively. Insurance stocks were boosted by the increase in premiums written in 2023, which also had a positive impact on the profitability of Insurance companies. Reforms from the Insurance Regulation Unit (IRU), which began with the introduction of the New Insurance Law, have supported the sector. 

 

Among banking stocks, Al Ahli Bank of Kuwait (ABK) and Boubyan Bank fell the most during the year, with total returns of -20.6% and -19.6% respectively. ABK’s share price witnessed a sharp decline in mid-2023 following the announcement that Gulf Bank and ABK are no longer pursuing a merger. Commercial Bank of Kuwait (CBK) was the only gainer among banking stocks, with a total return of 10.7% for the year. Among Premier market stocks, Kuwait Real Estate Company and Arzan Financial Group for Financing and Investment gained the most and registered total returns of 100.8% and 93.2% respectively, for the year. Kuwait Real Estate Company’s gains were driven by strong 9M 2023 earnings due to boosted sales in residential properties and higher income generation from operational properties.

 

Oil prices

Oil price settled at $77.0 per barrel, recording a yearly loss of 10.3%. Oil prices fell despite the Opec+ oil cuts, voluntary oil production cuts by Saudi Arabia and Russia and the geopolitical tensions in the Middle East. Opec+ had announced oil production cuts of about 3.66mn bpd in 2023, which supported oil prices for most parts of the year while the increase in production from non-Opec+ members and weak demand from China added downward pressure. Gold prices closed at $2,062.6/oz., a gain of 13.1% in 2023 due to the rise in geopolitical risks and the weakening of the US Dollar in the last quarter of 2023. Natural gas prices fell sharply by 43.8% during the year due to a rise in output and US inventories coupled with the lower-than-anticipated demand for heating in Europe.

 

Kuwait’s real estate market was stable in 9M 2023. In the initial two weeks of December 2023, real estate transactions in Kuwait reached a total value of roughly KD 98.5 million through 191 transactions, reflecting an increase of 20.2% compared to the corresponding period in the previous month.--TradeArabia News Service