In September 2017, FTSE reclassified Kuwait as a secondary emerging market (EM). This kicked off Kuwait’s journey towards ascending to EM status. In another step towards achieving full EM status, S&P Dow Jones announced that Kuwait’s stock market will be added to its Global Benchmark Indices with an EM classification, a move that would be effective this September. Finally, a potential upgrade to EM status by MSCI is in the cards and will cement Kuwait’s EM status.
The upgrade in status will lead to an improvement in market dynamics and the resulting passive inflows of $2.8 billion (Dh10.2bn) will undoubtedly be a boon, making it a highly anticipated event.
Analysts expect passive inflows of around $2.8bn in case of an MSCI EM upgrade, significantly higher than the $950 million or so of passive inflows from the FTSE EM upgrade. Foreign passive inflows usually hit the market around the implementation date, though, going by previous similar events, prepositioning by some active investors in the market happens before the upgrade announcement and implementation dates.
Additionally, on top of the $500bn or so of passive funds tracking the MSCI EM indices, they are used by actively managed funds with more than $1.5 trillion in assets, which could lead to sizable active inflows as well. Unlike the passive flows, which are more or less automatic, the magnitude of the active foreign flows will depend on the attractiveness of the Kuwaiti market and the companies in an EM context. As such, liquidity, valuation, earnings growth, transparency, corporate governance practices will all be factors that will affect which companies will attract active investors. It is this incentive that will help the market improve over time.
The impact of the MSCI upgrade process on the market so far this year has been easily felt, and could continue to affect the bourse in the period leading to the implementation and potentially beyond. The Kuwaiti market has traded in excess of $10.5bn in the first five months of the year, which is a 170 per cent increase over the same period last year. Net foreign flows grew significantly this year to $1bn. Even adjusted for the $300m or so of passive inflows triggered by the increase in the foreign ownership limit for the banks in March, this remains the highest net foreign inflow figure on record. On performance, Kuwait continues its strong performance year-to-date and the MSCI Kuwait index is up 24 per cent. This compares to 16 per cent and 12 per cent increases for the respective World and GCC Indices. We believe the anticipation of a positive announcement from MSCI regarding the upgrade is in part a driver for the outperformance of Kuwait this year, in addition to solid results from certain sectors such as banking.
Just to put things into context, the market has had a very good run since the FTSE EM upgrade announcement in September 2017, rising almost 34 per cent to date. It is important to keep that in mind when building expectations for future returns. Nonetheless, we still have a positive outlook on the Kuwaiti stock market over the medium-term, as we believe it offers investors the right mix of fundamental attractiveness and fund flow catalyst. We believe Kuwait is in a ‘sweet-spot’ from a macro perspective considering its comparatively low budget-breakeven level - one of the lowest in the GCC. This allows Kuwait to stay on course for executing its ambitious infrastructure-spending plan and maintain or potentially grow its sovereign wealth reserve.
Kuwait’s robust infrastructure spending plan is likely to result in notable GDP growth over the medium-term as per IMF forecasts. This is likely to have a multiplier effect resulting in earnings growth across multiple sectors especially the banks, which are very well represented in the market. Our fundamental case for Kuwait is strengthened by the funds flow angle. Following the FTSE flows, the attention now shifts to the potential MSCI upgrade. As mentioned earlier, this is a significant event and with the right ingredients can attract foreign flows that are more sizable than seen before.
From a structural perspective, we are also excited about the reforms that are taking place in Kuwait to open up the market further and employ global best practices when it comes to rules and regulations that govern the market. The reform process initiated by both Boursa Kuwait and the CMA is creating a more robust platform that allows improved access, transparency and accountability in the market. This will lead to a better functioning market and is at the heart of the push to upgrade Kuwait to EM status.
Husayn Shahrur, PhD and Wajih Al Boustany are respectively, managing director and assistant vice president, Mena Asset Management at NBK Capital, a member of The Gulf Bond and Sukuk Association
Jumanji: The Next Level
Director: Jake Kasdan
Stars: Dwayne Johnson, Kevin Hart, Karen Gillan, Jack Black, Nick Jonas
Two out of five stars
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Alan%20Wake%20Remastered%20
%3Cp%3E%3Cstrong%3EDeveloper%3A%20%3C%2Fstrong%3ERemedy%20Entertainment%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Microsoft%20Game%20Studios%3Cbr%3E%3Cstrong%3EConsoles%3A%3C%2Fstrong%3E%20PlayStation%204%20%26amp%3B%205%2C%20Xbox%3A%20360%20%26amp%3B%20One%20%26amp%3B%20Series%20X%2FS%20and%20Nintendo%20Switch%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
MATCH INFO
Manchester City 1 (Gundogan 56')
Shakhtar Donetsk 1 (Solomon 69')
It
Director: Andres Muschietti
Starring: Bill Skarsgard, Jaeden Lieberher, Sophia Lillis, Chosen Jacobs, Jeremy Ray Taylor
Three stars
Most%20polluted%20cities%20in%20the%20Middle%20East
%3Cp%3E1.%20Baghdad%2C%20Iraq%3Cbr%3E2.%20Manama%2C%20Bahrain%3Cbr%3E3.%20Dhahran%2C%20Saudi%20Arabia%3Cbr%3E4.%20Kuwait%20City%2C%20Kuwait%3Cbr%3E5.%20Ras%20Al%20Khaimah%2C%20UAE%3Cbr%3E6.%20Ash%20Shihaniyah%2C%20Qatar%3Cbr%3E7.%20Abu%20Dhabi%2C%20UAE%3Cbr%3E8.%20Cairo%2C%20Egypt%3Cbr%3E9.%20Riyadh%2C%20Saudi%20Arabia%3Cbr%3E10.%20Dubai%2C%20UAE%3C%2Fp%3E%0A%3Cp%3E%3Cem%3ESource%3A%202022%20World%20Air%20Quality%20Report%3C%2Fem%3E%3C%2Fp%3E%0A
MOST%20POLLUTED%20COUNTRIES%20IN%20THE%20WORLD
%3Cp%3E1.%20Chad%3Cbr%3E2.%20Iraq%3Cbr%3E3.%20Pakistan%3Cbr%3E4.%20Bahrain%3Cbr%3E5.%20Bangladesh%3Cbr%3E6.%20Burkina%20Faso%3Cbr%3E7.%20Kuwait%3Cbr%3E8.%20India%3Cbr%3E9.%20Egypt%3Cbr%3E10.%20Tajikistan%3Cbr%3E%3Cbr%3E%3Cem%3ESource%3A%202022%20World%20Air%20Quality%20Report%3C%2Fem%3E%3C%2Fp%3E%0A
Global state-owned investor ranking by size
|
1.
|
United States
|
|
2.
|
China
|
|
3.
|
UAE
|
|
4.
|
Japan
|
|
5
|
Norway
|
|
6.
|
Canada
|
|
7.
|
Singapore
|
|
8.
|
Australia
|
|
9.
|
Saudi Arabia
|
|
10.
|
South Korea
|
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
if you go
The flights
Etihad and Emirates fly direct to Kolkata from Dh1,504 and Dh1,450 return including taxes, respectively. The flight takes four hours 30 minutes outbound and 5 hours 30 minute returning.
The trains
Numerous trains link Kolkata and Murshidabad but the daily early morning Hazarduari Express (3’ 52”) is the fastest and most convenient; this service also stops in Plassey. The return train departs Murshidabad late afternoon. Though just about feasible as a day trip, staying overnight is recommended.
The hotels
Mursidabad’s hotels are less than modest but Berhampore, 11km south, offers more accommodation and facilities (and the Hazarduari Express also pauses here). Try Hotel The Fame, with an array of rooms from doubles at Rs1,596/Dh90 to a ‘grand presidential suite’ at Rs7,854/Dh443.
