Low oil prices continue to weigh on Kuwaiti shares, uncertainty dominates outlook . . . . . . . . . . . . . Kuwaiti stocks plunged on Monday in a low-volume trading after Brent resumed its drop and as investors wait for the announcement of the fourth-quarter financial results. The main gauge in the Kuwait slipped 0.76 percent or 49.67 points to close at 6,497.11 points. The Oil & Gas sector lost 0.15 percent or 0.73 points, yet the big loser was Basic materials as it fell 1.9 percent. On the other hand, Banks grew 0.8 percent. Kuwait Stock Exchange - KSE indices are still in a bearish direction since it touched a peak of 7,670.81 points at the end of September 2013. Brent crude for February delivery fell to a new low of $53.94 a barrel, the lowest in nearly six years, compared with the session’s high of $56.25 as crude oil prices showed rapid deceleration. Analysts predict the index may remain under pressure as oil resumes its bearish direction, heading towards the 2008 levels of $35 per barrel. Outlook While the outlook may be surrounded by uncertainty, Finance Minister Anas al-Saleh said on Sunday the development projects announced by the government will not be affected by the fall in oil prices seen in the past six months. Nevertheless, the high dependence on oil windfalls to generate growth suggest the country may face some difficulties amid the current low oil price environment. In 2013, the economy’s GDP reached 49.8 billion dinars, with a 63 percent contribution coming from the oil sector. With the kick-off of the new year, the government moved to slash its subsidy burden by raising the price of diesel at wholesalers and fuel stations to 0.170 dinar per litre, instead of 0.055 dinar. Despite the criticism, the government said it is looking forward to continuing with its subsidy reform, yet it delayed the removal of subsidies from petrol, electricity and water. The International Monetary Fund (IMF) said the current fiscal situation in Kuwait is strong with the progress in the non-oil activities, yet the government has to cut spending to save for the future. A medium-term fiscal strategy is required to drive reforms, the elements of which would include containing current expenditure growth, particularly subsidies and wages, prioritizing capital expenditure, and increasing non-oil revenue, the IMF said. The Kuwaiti economy expanded 2.6 percent last year and will grow 3.0 percent in 2015, According to Arab Times. #egyptyard
Posted on: Mon, 05 Jan 2015 15:57:35 +0000