May 1 (Bloomberg) — Kuwait’s benchmark index climbed to a three-year high on bets investors will buy more shares using money from government purchases of citizens’ loans.
Kuwait Food, which has the second-largest weighting on the gauge, advanced to the highest since 2008 and Combined Group Contracting Co., a construction company, rose the most since March 14. The Kuwait Stock Exchange Index gained for a ninth day, increasing 1.8 percent to 7,562.83, the highest close since April 2010. The gauge surged 11 percent last month, the sixth- best performer among 94 indexes tracked by Bloomberg.
The parliament of OPEC’s fourth-biggest producer last month passed a law requiring the government to pay 744 million dinars ($2.6 billion) to purchase citizens’ loans taken before March 30, 2008, and write off all interest before rescheduling payments. The law also requires that banks repay borrowers who were charged more than 4 percentage points above the base rate. Some 47,444 Kuwaitis who borrowed from conventional banks may benefit, according to estimates by lawmakers.
“Expectation that the cancellation of retail loans will bring more inflows to the market has allowed the Kuwait Stock Exchange to maintain its momentum for the past two weeks,” Julian Bruce, head of institutional trading at investment bank EFG-Hermes Holding SAE in Dubai, said in an e-mail.
The value of shares traded in Kuwait climbed to 94.7 million dinars today compared with a three-month daily average of 54.7 million dinars, according to data compiled by Bloomberg.
Bank lending in in the country grew 4.8 percent in February after an increase of 4.1 percent last year, the fastest pace since 2009, helped by a jump in consumer loans. Kuwait Finance House, the country’s second-biggest financial company by assets, has climbed 6 percent since reporting a 15 percent increase in first-quarter profit April 23. The stock was unchanged today.
Kuwait’s shares have rebounded helped mainly by a “sharp rally in shares of Kuwait Finance House,” David Verghese, a fund manager at Dubai-based Emirates NBD Asset Management, said by e-mail.
Kuwait Food, known as Americana, rose 3.1 percent to 1,980 fils, the highest since October 2008. Combined Group Contracting gained 2.9 percent to 1,400 fils. United Projects Group KSCC, a provider of air and catering services, jumped 5.3 percent to 800 fils, the highest level in more than two weeks.
Elsewhere in the region, Saudi Arabia’s Tadawul All Share Index fell less than 0.1 percent, trimming a gain this week to 0.7 percent. Dubai’s DFM General Index and Abu Dhabi’s measure were little changed, while Qatar’s gauge lost 0.1 percent. Oman’s MSM30 Index advanced 0.3 percent. Markets in Egypt and Bahrain were closed for a holiday.
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–Editors: Claudia Maedler, Daliah Merzaban