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00:00Welcome to a new episode of an eye on Kuwait, and you are watching this week's episode.
00:28Kuwait is recovering strongly in April, and its indicators are losing historical levels.
00:33Kuwait is hosting an international and national dialogue to establish a strategic partnership
00:38around financing to serve the goals of sustainable development.
00:42Companies and banks continue to announce strong results in the first quarter of 2024.
00:49These topics and others in an eye on Kuwait.
00:52Welcome.
00:58The Kuwait Stock Exchange's 1st and 2nd quarters recorded strong recessions last April,
01:04and the distribution of public funds was worth it,
01:07in addition to the severe geopolitical situation and the fluctuations in the exceptional period
01:13from the factors that resulted in the pressure on the stock exchange indicators.
01:18April was a month of clear recessions in the Kuwaiti stock exchange,
01:22and painful losses in stock prices.
01:25The first market indicator was the most recessive,
01:28losing more than 4 points on the journey to get rid of historical barriers.
01:34The indicator fell below 8,000 points as a sign,
01:39losing more than 350 points,
01:42which led to a general indicator recession of more than 3 points,
01:47while the main indicator was less than 1%.
01:53The announcements were weak, and there was a delay,
01:57and there was a break after a week, a month and a half of break.
02:03The international events that are happening one after the other
02:11do not give hope for stability.
02:16So, in the international markets,
02:19what happens is that they want stability, they want calm.
02:22If this thing is not available, or there is doubt, or there is fear,
02:27they go to places where there is security, like gold, like metals,
02:32they call it security.
02:34And if there was a dispute over the distribution of profits
02:37from cash and gift stocks,
02:39and the main pressure on the prices of stocks and stock exchange indicators in April,
02:43then the stock exchange also paid a price for external changes,
02:47such as increasing the prices of global oil,
02:49and not decreasing the interest rates,
02:51and the geopolitical and regional situation is in danger.
02:55So, there is a precaution from the investors,
02:57whether the situation will get better or not,
02:59but I see more stability in the second half.
03:02For us, for the region,
03:04the two issues are the prices of oil and the geopolitical situation.
03:10For me, they are related to each other.
03:12And while the governor's activities on the implementation of pattern movements
03:16prior to the formation of public associations and after that,
03:19April was also full of striking activities,
03:22which represented a refuge for small investors to achieve fast goals,
03:26even under pressure.
03:28The striking activity was evident on stocks such as Ayan,
03:31Kipco, Arzan Group, IFA Hotels and IFA Al-Qabida,
03:35especially that most of those companies
03:37announced that they will achieve outstanding annual financial results.
03:41Everything we did to reestablish the company,
03:44is to ask for the stability of profits for the company,
03:49and to have a positive cash flow.
03:56We create value for the company,
03:58whether it is industry, commerce, real estate,
04:03or even investment in financial markets
04:08through the different investment tools that we see in the world.
04:18And we bring them to our financial market.
04:22Agility announced the distribution of its shares in a new company,
04:27due to exceptional fluctuations in the share price,
04:31which decreased as a result of the distribution,
04:33after it lost more than 50% of its value,
04:37adding more pressure on Kuwaiti stock exchanges.
04:41The price of these shares and the way of accounting
04:44will affect Agility's data.
04:47Therefore, we want to see what will be the financial impact
04:51after the acquisition of Agility.
04:54We know that the company was owned by Agility 100%,
04:59and this is a distribution of Ayan.
05:01This may affect the valuation of Agility's shares in Kuwait,
05:05especially that some are considered a division of the company,
05:08and not a normal distribution of Ayan.
05:12At the end of April,
05:13the stock market indicators lost their value in the recovery journey
05:17since the last quarter of last year.
05:20However, despite the negativity of the reviews,
05:22analysts see potential positives.
05:25The price drop returns the shares to the attractive range,
05:29and the review of the indicators puts them back in the support areas.
05:33All this is a strip of non-changing events
05:36that affect the view of investors
05:38and may lead to more declines.
05:44Despite the reviews of the Kuwait Stock Exchange in April,
05:48the report of Al-Markez Al-Mali
05:51looks positively at the performance of the stock market in general,
05:54indicating that it has undergone more pressure
05:57due to the operational performance
06:00and the first quarter results of the listed companies,
06:03as well as the improvement of the global view of the Kuwaiti economy.
06:08Despite the reviews of the Kuwait Stock Exchange
06:11and the geopolitical situation around it,
06:14parties such as Al-Markez Al-Mali did not give up their positive view,
06:18and Al-Markez saw in a recent report
06:21that the positive financial data of the listed companies
06:24that were issued at the end of the first quarter
06:27were among several factors that reduced the interest rates of the stock market.
06:32Al-Markez also witnessed the adjustment of the international bank's expectations
06:36regarding the Kuwaiti economic growth in 2024
06:40to 2.8% on an annual basis,
06:45which is higher than previous expectations issued in January of this year.
06:50We have one of the largest stock exchanges,
06:53we have financial stability,
06:57and we have an oil reserve in the reserves of the developed countries,
07:04so we are not considered a poor country,
07:06so the economy is more or less OK.
07:08However, the report of Al-Markez Al-Mali also pointed out
07:11that the Kuwaiti spending on projects in 2023 and 2024
07:17reached about 345 million dinars,
07:22which is a third of the planned capital expenditures,
07:26which reached 1.1 billion dinars.
07:29The report also pointed out the decrease in the activity of projects
07:32in the first quarter of 2024,
07:35where the value of projects was 327 million dinars,
07:41which is less than 1.8 billion dinars,
07:44in the first quarter of 2023.
07:48It is known that the size of projects and the fluctuation of investments
07:52are among the factors that increase the activity of the domestic economy.
07:57Of course, the state-sponsored role must move faster.
08:01As you can see, there is no lack of projects,
08:05and there is a delay in some projects.
08:09We hope that the new government,
08:12the new direction, and the support from all parties,
08:17will move faster,
08:20and we see that there are many projects that will be proposed in Kuwait,
08:23and God willing, we will have the lion's share in them.
08:27The consumer prices in Kuwait rose by 3.2% in March,
08:32as well as the release of good figures for the purchasing manager,
08:36which are added factors in improving the future outlook
08:40for the Kuwaiti economy.
08:42If you own a company, and you see the chart,
08:45you see that the pressure is increasing,
08:47which means that if you hesitate to ask for the next season,
08:50you will ask for more.
08:52And the opposite is true.
08:54If you are a bank, and you are making a forecast for financing
08:59in the coming period,
09:01and you see that the trust in the index has increased,
09:04you will ask for a loan if you buy a car,
09:07and if you buy a phone,
09:10you know the consumer issues.
09:13For the central banks,
09:15the financial markets are also moving,
09:19not only with this index,
09:21but also with the main indexes,
09:23which are the global stock markets,
09:25which are going up and down based on the consumer's trust,
09:28because the economy in the world,
09:30let's say the Gulf,
09:32is different,
09:34but for the world,
09:36the economy is called a circular economy.
09:38The more consumption,
09:40the more production,
09:42and the more economic activity,
09:44the more economic production.
09:47We are still with Al-Markaz Al-Mali,
09:49the owner of Al-Taqreer.
09:51The company announced a growth of 187%
09:55in its profits from the first quarter,
09:58to reach 2,700,000 dinars.
10:02Al-Markaz Al-Mali has returned the growth of profits
10:05to the rise of fair values of financial assets
10:08through profits and losses.
10:10The Kuwait Stock Exchange,
10:12and the Gulf and international markets
10:14have seen a strong activity
10:16during January and February.
10:18An activity that has succeeded
10:20in keeping the first quarter indicators
10:22in the positive range,
10:24despite the ups and downs
10:26of the stock market in March.
10:28This is what the companies and banks
10:30have been communicating
10:32since their financial statements
10:34were announced in the first quarter of 2024.
10:36In this framework,
10:38the Kuwaiti People's Bank
10:40announced a growth of profits
10:42of approximately 9%
10:44in the first quarter.
11:13In return,
11:14there was clear support for profits
11:16from the operational revenues,
11:18which grew by 9%.
11:20This time,
11:228 million dinars were planned
11:24during the first quarter of this year.
11:26This is one of the main reasons
11:28that led to the growth of net profits
11:30for the Kuwait Stock Exchange,
11:32in addition to the increase
11:34in trading activity
11:36for the Kuwait Stock Exchange
11:38during the past period.
11:40This is one of the main reasons
11:42that led to the growth of net profits
11:44for the Kuwait Stock Exchange
11:46during the past period.
11:48In return,
11:50there was a slight growth
11:52of approximately 20%.
11:54In return,
11:56the requirements for the company
11:58declined by 9%.
12:00As for the total rights of the shareholders,
12:02it rose by 2%
12:04to 54 million dinars
12:06during the first quarter
12:08of the current year.
12:10These are the numbers
12:12that were achieved
12:14during the first quarter of 2023.
12:16These are the numbers that were achieved
12:18during the first quarter of 2023.
12:20These are the numbers that were achieved
12:22during the first quarter of 2023.
12:38These are the numbers that were achieved
12:40during the first quarter of 2023.
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14:03Welcome. We are still with the results of the companies and banks in the first quarter of 2024.
14:12In this framework, the Kuwaiti Commercial Bank announced a growth in its profits.
14:17From that quarter, it reached 13% to reach profits of 28 million dinars.
14:23Elham Mahfouz, the CEO of the Kuwaiti Commercial Bank,
14:27announced to CNBC that the bank is implementing a strategy to maintain its status.
14:33The main function of the bank is to focus on the local market.
14:37For us, the local market is the stage of lending to individuals and companies in all sectors.
14:44Whether it is construction, construction, oil, services, and even trading.
14:52We did the same in the past years.
14:55We did not open foreign branches.
14:57We did the same in Kuwait.
15:00Is this a challenge?
15:02It is a challenge because you know that in order to grow in the same situation as a state,
15:07with the existing competition, we are 10 banks.
15:10As you know, 5 Islamic and 5 non-Islamic.
15:13The competition itself is not easy.
15:15But I tried to keep a clean portfolio.
15:17Because I also have NPL zero, which is the affected loans.
15:20It must be zero.
15:22So, in the past years, especially in 2000 and after 2009,
15:28because of the crisis with the investment companies,
15:31in 2010 and 2011, loans were withdrawn.
15:34Also, during the work of the bank, about 5 or 6 years ago,
15:37the same thing happened and loans were withdrawn.
15:39Therefore, the portfolio is clean at the moment.
15:41Of course, in the future, there may be unexpected things.
15:45Zero NPL?
15:46Yes, zero NPL.
15:47But if you look at all the time you spend in your budget,
15:51some specializations are either professional,
15:54or you expect that something will happen in the future.
15:59You can consider this part as your specialization.
16:02It is not fair.
16:03It is less than 1%.
16:05But in the end, you take it as a specialization.
16:07So, it is zero.
16:08But professionally, you dedicate yourself to the future.
16:10But this is also another challenge.
16:12It does not explain the size of the growth in profits and distribution.
16:15Yes, of course.
16:16Focusing on the current workers with some of the selected workers,
16:20which we are very selected.
16:22My portfolio is a little bigger, but within reasonable limits.
16:26I have your wills.
16:27Then, the global interest has also increased,
16:30and the benefits and currencies.
16:32Then, I also have a return for some loans that were affected.
16:36We have a very reasonable return at the end of the year.
16:40So, last year, you had 23%.
16:42Correct.
16:43Even in terms of security and growth in security in Kuwait,
16:47last year, 2023, the growth of security was not large and small compared to 2022.
16:53Do we expect this to continue in the year 2024?
16:56Especially since we do not expect that the price will be lowered,
17:00as they said, in the second half of the year,
17:03because of the data that was issued at the time of the crisis.
17:06I know that when you said that you will reduce the interest four times,
17:09we were a little surprised, on what basis?
17:11Because you saw how the inflation works all over the world,
17:14and in the surrounding countries.
17:15Even all over the world, not only in Kuwait.
17:17And some countries are affected more than Kuwait, of course,
17:19because the financial situation in Kuwait is very strong,
17:21and the banks are in a very strong position.
17:23But when you look at it,
17:24they are talking about it only once, maybe at the end of the year.
17:27But the interest rate will still be at a high level.
17:30I expect that by 2025, if the interest rate starts to decline,
17:33it will not be in the sizes that are five or six times,
17:36maybe two or three times.
17:37Because there are global conditions now,
17:39especially in the region,
17:40and the fear that anything may develop in any war,
17:44it can happen from any country,
17:45or the intervention of Iran, or the intervention of Israel,
17:48any mistake in the region can lead to other consequences,
17:51which makes the interest rate not go down
17:53and other changes and other developments occur.
17:55So the consequences will not be clear
17:57until...
17:58Of course, we all do not expect that the conflict will expand,
18:02there will be very big consequences
18:04on the financial side,
18:05the supply chain,
18:06the interests,
18:07everything will be affected.
18:08Of course.
18:09And apart from the geopolitical developments here in Kuwait,
18:12we are now talking about the application of the tax,
18:14the tax on companies.
18:15This tax, of course,
18:16is talking about up to 15%,
18:18that is, it accuses any growth.
18:20Of course, 15% is certainly not a small percentage.
18:23It already takes, for the bank,
18:25the intellectual property,
18:26the intellectual property is paid for,
18:28about 4.5%.
18:29So you have the difference of 11.5%.
18:31Of course, it is also not a small amount.
18:33Of course, I am with you.
18:34Because you have to compensate it for your interests
18:36so that you can pay every little bit.
18:38The high rate is 15% at the end.
18:40Bottom line, it's a cost on you.
18:43Yes.
18:44It also represents a challenge for the banking sector and all companies.
18:47For all companies and all the banking sector,
18:49because it is an international issue.
18:50We do not have rules for this.
18:52First of all, it will be an international law
18:54that applies to all countries.
19:00Kuwait hosted an international dialogue
19:02on development
19:03between the Financial Assistance Committee
19:05affiliated with the Organization for Economic Cooperation and Development,
19:09OECD,
19:10and the Arab countries.
19:12The conference included institutions such as the International Bank,
19:15the International Monetary Fund,
19:17the OPEC,
19:18and the Arab Economic and Social Development Fund,
19:20as well as the Gulf Development Fund.
19:23The conference addressed the challenges
19:25that face the financing of developing countries,
19:28especially in light of the high interest rates.
19:31The situation of sustainable development
19:34is now very dangerous
19:37because only 15% of the goals of sustainable development
19:42are to be fully investigated
19:46from now until 2030.
19:4850% of these goals are deviated from the path
19:53and the rest, 35%,
19:57are worse than what we had in 2015.
20:00Therefore, any effort in cooperation
20:02between the Organization for Economic Cooperation and Development
20:05and the Arab regional organizations,
20:09and we are honored to host this conference in Kuwait,
20:11as well as cooperation with the parties of the private sector
20:16to push the development movement,
20:19is one of the things that is required now
20:22to save what can be saved
20:24in order to achieve the goals of sustainable development.
20:27We are not only talking about numbers,
20:29but we are talking about issues related to poverty,
20:32dealing with hunger challenges,
20:34meeting the types of education and health care,
20:36providing job opportunities,
20:38and reducing gaps between different countries,
20:43as well as improving income distribution,
20:46as well as the big issue of climate change.
20:49So, it is about funding,
20:51and pushing the movement of technology, research, development,
20:54and supporting it with data,
20:56as well as the incentives that enable us to achieve these goals.
21:00Doctor, in light of inflation and rising interest rates,
21:03do these slogans remain?
21:05Because we really see developing countries
21:08full of genes, and we have many examples.
21:10I attended the climate conference where you were,
21:14and they talked about the carbon subsidy,
21:20and tried to get the developing countries to get used to these effects,
21:24and maybe they didn't achieve anything.
21:26So, honestly, do these slogans and slogans remain?
21:30Let me tell you something.
21:31Of course, the countries that have financial advantages
21:35that allow them to support themselves and other countries,
21:39should move away from not only doing good for others,
21:45but even if they have a narrow perspective,
21:51they should be able to save themselves from problems
21:55related to the regression of sustainable development.
21:58Because these promises have not been fulfilled,
22:03and if money is wasted in areas that have nothing to do with development,
22:08the financial advantages that are available worldwide are much greater.
22:13It is true that we need between 4 and 5 trillion dollars annually,
22:17but the financial advantages that exist in the world,
22:20and the principles that are under administration,
22:22are greater than this,
22:24which is not less than 30% of these numbers.
22:27So, it is a matter of political will,
22:30and it is said that the developing countries
22:33should withdraw their commitments in order to protect their interests,
22:38even if this becomes a narrow perspective.
22:42Because, first of all, if development and growth happen in the right direction,
22:47there will be better opportunities for production, trade, and investment.
22:51It will reduce the problems related to supply chains.
22:54It will also deal with the problems related to forced immigration,
23:00and the refugee cases that have increased in recent years.
23:05So, it is not possible for the rich countries to complain about the regression in growth,
23:13trade, and the increase in immigration,
23:15and do not do what is required,
23:17and what they have committed to do,
23:19which is to allow funding according to what they have committed to do,
23:24even before the goals of sustainable development in 2015,
23:27to make a commitment of less than 0.7% of local resources
23:32directed to the least income countries.
23:35In all these commitments,
23:38what has become of them is the little reality.
23:41And the reality is,
23:42considering the past year and the current year as well,
23:45that half of the flows directed to developing countries
23:49have turned from cumulative numbers to negative numbers.
23:52Whether the international financial institutions benefit from it,
23:57because now they are funding development,
24:02but now the countries that have been loaned from it before the pandemic,
24:06and after it, they are paying off their loans now.
24:08The same goes for loans and financing with the private sector.
24:13We need a completely new and different approach.
24:17Absolutely.
24:22And with this, we conclude this week's episode.
24:24Join us next week, God willing,
24:26in an Eye on Kuwait.
24:43This program is sponsored by
24:45The Kuwait Stock Exchange
24:47A story of success