There is a rumor circling around in Kuwait that Ebraheem Dabdoob the CEO of the National bank of Kuwait is going to submit his resignation due to a conflict with one of the board members ?

Update: CNBC confirmed that’s it is a rumor

thanks saleh

Its Signed the deal is done and dusted and this is the picture to prove it

Thank you F.B.

For nearly a month now, we realized that the market stabilized and started to trade in a narrow horizontal channel. In the past two days, the market started a downward trend coupled with a drop in volume. With all the positive news regarding the sale of Zain Africa, the establishment of the Capital Markets Authority and the planned infrastructure investments from the 5 year government plan we might find it strange to see this correction now.

In my last post, I said that we could test the resistance of 7500 in the next few weeks. I probably should have said in the next few months! :) Any way, the latest market correction started after the index closed around 7495 points, only about 5 points off my target.

Let’s have a look at what the charts have to say:

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The National Bank of Kuwait have just announced their latest results where they announced that they managed to generate over 265.2 million KD in profits for 2009. The earnings growth rate is 3.87% The EPS of the share is a respectable 92 fils. The dividends announced are as follows: 40% cash 10% stocks and a capital increase of 10% at 500 fils. The market seemed relieved at these results and we saw new buying pressure on Agility, National Industries and even KFH.

As usual, NBK is usually the first blue chip company to announce its results and they did not disappoint. I hope other companies announce their results soon so we can get a clear view of how the market will perform this quarter. It would be interesting to see how KFH compares to this result.

الكبير طول عمره كبير

You should have realized by now that I focus my analysis on the stock market as a whole and not on individual stocks. The reason for this is that I like to base my observations from a broad point of view, the whole picture if you will. Technically analyzing individual stocks can be misleading and can also be easily manipulated. That does not mean studying individual stocks is futile, on the contrary, it can be very lucrative.

This post represents my second attempt in analyzing a stock, my first attempt was done way back, maybe in 2007 in our old blog 4thring.com. That post, along with the rest of the blog is unfortunately lost. Anyway, I will now focus my attention on Portland Cement Company, our stock in question.

This stock alert will be divided into two parts: A brief, fundamental glance and the usual technical view.

The Fundamentals

• Portland’s paid up capital is relatively small which is 8.264 million KD and has only 65.25 million shares floating in the market. The rest is owned by strategic investors.
• According to the latest figures, Portland’s multiples are favorable in relation with its sector. Its P/E ratio is at 7.99 which is among the lowest in the industrial sector and is considerably lower than the sector average of 18. Its P/BV is also also lower than the sector average, 1.19 vs 1.32.
• The recorded EPS for the first 3 quarters of 2009 is 170 fils, compared with a loss of 43 for the same period in 2008.
• The stock is currently trading at 880 fils, its 52 week high.
• Its exposure to the stock market is well publicized and it is rumored that they have a considerable position in Zain. Their investments at fair value is at around 20.4 million KD at their investments available for sale is recorded at around 21.7 million.

If we looked at Zain’s price in the end of Q3 2009, we will see that it closed at 1.3 KD. Zain is currently trading at 1 KD and that means that if the rumors of Portland owning Zain is true then they are looking at a 23% unrealized loss. This should also mean that both multiples mentioned above as well as the EPS can change drastically. Now that is something to consider.

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A few minutes ago, we saw this announcement in KSE from the National Investments Company:

This announcement basically says that due to the recent changes in financial and economic conditions of the region, the Zain deal might take longer than planned. They also assured us that the deal is still ongoing.

Now I’m not so sure about this announcement, were there any recent changes in the financial and economic conditions of the region? Did I miss something?

Please advise.

The Parliament just now ignored the pleas of the Central Bank and other financial/economic professionals to force the government to buy out all of the interest on loans taken by Kuwaitis. The result of the vote was 35 in favor and 22 naysayers.

I admit that I will benefit from this vote but I am extremely disappointed with this decision. The problem is the lack of foresight. Sadly, this has been a long-lasting trait of the MPs. Some of the MPs unfortunately decided to gain popularity at the expense of the well-being of the whole economy.

What do you guys think?

I found this ad in today’s Al Qabas newspaper. When I first laid my eyes on this ad I was mystified… and now, a few hours later, I am still mystified.

Who is this guy? What company is he representing? Who are his clients? Is this a fund?

If anybody has information could you please enlighten me?

Am I the only one who missed seeing the volume exceed 100 million KD? :)

Anyway, over the past few days we saw a good change in investor sentiment. There could be a few reasons that would justify such a change:

• Global’s announcement that they will reschedule their $1.7 billion loans. Finally some good news for the long-suffering Global employees.
• KIA’s selling their stake in CitiGroup, realizing over 30% in gains. The funds generated from this could be used in the local markets.
• The Prime Minister’s decision to finally face a grilling session from the National Assembly.
• The Prime Minister got an expected vote of confidence from the National Assembly.
• Renewed confidence regarding Zain’s deal with rumors circulating regarding the 10% payment of the deal.
• The success of the GCC meeting in Kuwait with the promise of a number of huge infrastructure projects.

And now (obviously) we turn our attention to the charts. This time I decided to show two charts, one of them shows the short term implications and the other shows a broader and longer term view.

We start with the short term chart:

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It has been a while since I posted something about KSE, the problem is that I find difficulty writing negative things about the recent fall in KSE. Since we just ended a positive week, I feel it is fine to look back in retrospect. Some of the reasons behind the fall of KSE in the past few weeks are as follows:

• The doubt surrounding the Zain deal, a deal that many observers liken to a financial Messiah.
• The fear emanating from banks taking in extra provisions and the lower than expected results from a number of blue chip companies.
• The potentially devastating news regarding Agility and the mass fraud accusations.

Now, many might look at these reasons and feel that investing in KSE is like burning your hard-earned savings. But let’s look at it from a technical perspective shall we?

Let’s see what the chart has to say:

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What am I talking about? Watch this video:

It is funny that this video was made over 20 years ago. It still applied to what we saw last year.

Interesting fact (according to Wikipedia): At its peak, its (Al Manakh) market capitalization was the third highest in the world, behind only the U.S. and Japan, and ahead of the U.K. and France.

Last week, I posted about what I thought was the reason behind the very low volumes we saw in KSE over the past few weeks.

I will not add anything to what I already said, except for this chart:

This 1 year-daily chart shows that we are actually moving in a sideways trading range since July. We are not actually in free fall… yet. Anyway, the chart shows that today’s close is very close to the 200-day moving average (As represented by the blue line). Is this a coincidence? I don’t know. :)

What I do know is that the 200-day moving average is considered a strong support line for the index. If you decide to bail out on the market and sell everything then I suggest that you should at least study the market closely tomorrow. You never know, this support line might actually be able to contain the index.

As all investors know, the worst thing that can happen to you is to sell a losing position at the bottom of a trend. It happened to me many, many times. And I get irritated each and every time.

I should also say that if the Zain deal is officially signed then expect a significant increase in optimism and a rally in the market. If the Zain deal is officially cancelled then let’s say that we are back to square one, probably worse.

Either way, when the Zain deal is over, I’m going to take a loooong holiday…. I have had enough of this drama.

Allahu A3lam

Evidently, KSE was a very boring place for the past week and the reason was the very low volume traded.

The other GCC markets are better off, the global markets are also doing fine, the price of oil is reaching new heights. All of that optimism makes people ask themselves: What’s wrong with the Kuwaiti market? Why are people not investing in KSE?

I think the reason for the low liquidity is very simple and obvious.

When we examine the market we realize that the drop in volume coincided with a similar drop in the volume traded of Zain shares. Zain saw a decrease in volume because most investors have already or are in the process of transferring their shares to National Investments Company.

Now let’s examine this from a numerical perspective:

Zain has around 3.84 billion shares outstanding. If we took 46% of that we would get around 1.77 billion shares which are held in the hope of being sold to the Indian Consortium. In a sense, 1.77 billion shares worth of Zain are currently not in the market. Now if we multiplied the number of shares held in NIC by Zain’s latest closing price we would see that over 2.4 billion Kuwaiti Dinars are now frozen.

In other words, the drop in volume is probably because investors are hoping to sell Zain to the Indian consortium and are willing to do nothing for the time being and watch as the market loses its liquidity.

Now imagine what could happen to the market if the deal went through. But try to be sensible. :)

What we are seeing today is a classic case of investors in panic. What was the reason for this panic?

Did a major company announce huge losses?

Was there an announcement that a listed company filed for bankruptcy?

Is there a bank in jeopardy?

I think the real reason was none of the above. So… what exactly happened to justify this massacre?

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People have been asking me about how they should invest in KSE and my answer usually is to study the market… The problem with this answer is that it raises more questions than answers. This post is my modest attempt to explain.

Please note that this post is intended for people who are interested in investing but have no idea how to do so effectively.

The first thing a prospective investor should have is knowledge of the market. When I say knowledge I mean which companies are worth investing in and which ones are basically a waste of time. One quick way of finding this out is by knowing how much each company is ‘worth’. Share price is not an accurate measure of this. A company could have a higher share price but that doesn’t always mean that its value is higher. An obvious example of this would be Mena Holding, last year Mena Holding had a higher share price than Zain, but in reality it is worth only a fraction of Zain.

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