Markets rebound significantly, shedding a third of losses incurred on Sunday, amidst ongoing regional war apprehensions.
In the midst of the fourth day of the escalating conflict between Israel and Iran, the Kuwait Stock Exchange defied expectations and closed up, defying the lack of a ceasefire and broader regional instability. This unexpected upturn was echoed across Gulf markets, as they managed to recover a chunk of the massive losses sustained since last Thursday.
According to Al-Rai, the Gulf region's stock markets recuperated a whopping $39.6 billion in total losses, with Kuwait alone regaining approximately 686 million dinars ($2.3 billion), roughly 36.7% of its initial losses. This boosted Kuwait's market capitalization to a total of $47.536 billion.
Leading the pack was Saudi Arabia, which saw a $6.7 billion rebound, bolstered by the performance of Aramco shares in line with global oil price movements. Qatar followed suit with a $3.2 billion increase, while Abu Dhabi added $2.8 billion, Dubai $1.7 billion, Oman $300 million, and Bahrain $100 million. It's worth noting that 11 sectors in Kuwait contributed to the market's rise, with the energy sector experiencing a jump of 4.14%.
However, the basic materials and insurance sectors saw declines of 3.09% and 2.71%, respectively. The gains were largely driven by renewed interest in operational stocks that had witnessed recent price drops, ahead of upcoming first-half earnings reports and dividend announcements.
The Premier Market Index rose 1.4% (119.2 points), the General Index gained 1.46% (114.63 points), the Main 50 Index increased 1.68% (112.94 points), and the Main Index added 1.76% (119.08 points). Despite this positive trend, market liquidity decreased by 19.1% to 103.25 million dinars, the volume of traded shares declined by 5.3%, and the number of executed transactions fell to 26,320.
Analysts attribute the bounce-back to selective buying of leading stocks by institutional investors and funds, taking advantage of undervalued prices. This strategy reflects confidence in the markets' ability to weather geopolitical crises, as demonstrated in previous conflicts like the Russia-Ukraine war and the Israel-Hamas conflict.
Meanwhile, Iran's authorities have announced that the Tehran Stock Exchange and financial markets will remain closed until further notice to protect citizens' assets amid escalating Israeli airstrikes. The Iranian rial has continued to weaken significantly against foreign currencies, and the Tehran Bazaar has also been shut, although local banks remain operational.
In the grand scheme of things, despite regional instability caused by the Israel-Iran conflict, Gulf stock markets, including Kuwait, have shown resilience due to factors like selective buying and insulation from geopolitical fallout. Historically, stock markets have exhibited the ability to recover quickly from geopolitical shocks, demonstrating market stabilization once the immediate shock passes. Additionally, some Gulf countries have diversified economies, which can help mitigate the impact of regional instability, enabling certain markets to be less affected by the conflict. Investors in these regions may also be focusing on strategic investments that are less directly impacted by the conflict, contributing to market recovery.
- Amidst the ongoing war-and-conflicts between Israel and Iran, the resilience of Gulf businesses, as demonstrated by the Kuwait Stock Exchange's unexpected upturn, suggests a notable degree of insulation from geopolitical fallout in the finance industry.
- Politics and general news regarding the Israel-Iran conflict have had a significant impact on the Tehran Stock Exchange, causing it to close until further notice, while local banks remain operational to protect citizens' assets.
- In the face of wars and conflicts, such as the Russia-Ukraine war and the Israel-Hamas conflict, the business world has shown a remarkable ability to recover quickly, as evidenced by the strategic investments and selective buying strategies adopted by institutional investors and funds in the Gulf region's financial markets.
