December Confessions #1 December 30, 2008
Posted by Ali in Regulation, analysis, kuwait.Tags: December Confessions, Intervention, investment
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During December the market confessed three important facts. The first is that the Kuwait Investment Authority (KIA) will not provide the optimism needed to restore confidence in the market. The second is that investment banks will fail in succession amid the greatest government intervention since souk almanakh. Finally that oil prices will no longer be controlled by the oil cartel, OPEC.
The Mega Fund Investment Strategy
Over the previous month Mustafa Al-Shamaly, Minister of Finance, gave three different statements, over a period of three weeks regarding the date of the first acquisition of the Mega Fund. Following the third statement investor confidence turned to a new low as speculators lost faith in the market or the very existence of the Fund. (more…)
KIC Funds delayed December 25, 2008
Posted by mylastresort in analysis, kuwait.Tags: Intervention, KIA, KIC
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Contrary to many statements in the news the Kuwait Investment Company (KIC) funds have not invested in the Kuwait Stock Exchange (KSE), yet. The KIC has received the funds for investment but decided not to act. Even after knowing that the funds were coming, they decided not to prepare for the investment until the funds arrive. Now that the funds were received, the company just decided to form a committee to study the potential investments. No statement was made public on behalf of the company.
In a press release on Monday, the government announced plans to invest KD 1 billion in the market. Due to the reckless behaviour on behalf of the KIC, investor confidence has reached an all time low. Any government press release will not be regarded as fact and dismissed due to the lack of trust in the government following the actions taken by KIA [Correction] KIC.
Collateral Stock Rules Unchanged December 25, 2008
Posted by mylastresort in kuwait.Tags: CBK, Intervention
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Kuwaiti banks face unknown punishment if they liquidate stocks held as collateral, in a regulation passed by the Central Bank in October. The rumors that this regulation was reversed was quickly refuted by the CBK governor.
“What is being reported, the rumors on this issue, is completely untrue”
- Shiekh Salem Abdulaziz Al Sabah, Governor
Every regulation generates greater innovation, thus banks have gone around this by asking customers to willfully consent to liquidating their portfolios which, technically, resolves the issue without the unknown penalty. The lack of transparency keeps the public from knowing the ‘punishment’ banks may receive by getting rid of the stocks in their portfolios. The market has fallen over 50% since its peak this year.
The Central Bank has previously stated that it expects some investment companies to run into trouble due to their exposure to the global arena.
KSE Rally! – 9:05am December 23, 2008
Posted by mylastresort in analysis, kuwait.Tags: Intervention, KIA, KSE
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First 5 minutes of market open
The Kuwait Stock Exchange opened above 1.5% and rose over 200 points within the first 5 minutes. Nearly all shares have reached their daily limit highs. These actions follow the previous day announcement by KUNA regarding the KIA investment’s to take place on Wednesday.
“The market is reacting to the Minister of Finance’s statement regarding the portfolio injection… Investors are capitalising on this opportunity because all blue chips were limit down on Monday. I think the trend will reverse. All of the key stocks were limit up from the moment they opened, with huge bids.”- Ammar Hajeyah, Assistant Manager, Asset Management, Global Investment House
Gulf Bank of Kuwait (GBK) Possible Collapse – (Update) October 26, 2008
Posted by mylastresort in analysis.Tags: Bankruptcy, Central Bank of Kuwait, economy, GBK, Gulf bank of Kuwait, Intervention, kuwait
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Following the reports of Gulf Bank of Kuwait (GBK) suffering massive losses earlier this morning I have decided to explain the severity of the situation and the possible outcomes which might occur.
Initially, the bank will lose credibility both, locally and internationally. Customers will demand their cash from their accounts and early maturity from their deposits. Corporate clients will not risk their businesses future with an ailing bank and cease operating in their GBK accounts. No banks will deal with a bank rumored to be in a bad position. Therefore GBK funds will freeze. THE BANK WILL FAIL EVENTUALLY its just a matter of time. Following a run on Gulf Bank of Kuwait (GBK) and a liquidity squeeze the bank will be forced into one of the following outcomes: (more…)
Fed actions in chronological order (Article) March 18, 2008
Posted by mylastresort in analysis.Tags: Bank of Canada, Bank of England, Central Bank Actions, Credit Crunch, Crisis, Cuts, Discount Rate, economy, Emergency, European Central Bank, FED, Federal Reserve, Federal Reserve Actions, Feds actions, Financial Markets, Great Depression, Housing, Intervention, JPMorgan Chase, Rate cut, Swiss National Bank, Target, United States, US, USD
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Everyone is talking about the Feds actions in the market and I just found this article very interesting. It depicts the US Federal Reserves actions in chronological order.
(Reuters) – The Federal Reserve on Sunday lowered the discount rate it charges on direct loans to banks and announced a new lending program to provide credit to other big Wall Street firms, the latest in a series of moves to try to stabilize financial markets.
The Fed cut the discount rate to 3.25 percent from 3.5 percent, effective immediately, and said it would increase the maximum maturity of discount rate loans to 90 days from 30 days.
US Dollar crashes midday March 17, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors.Tags: bahrain, Bombay, Central Bank, Charts, Commerzbank, Corporates & Markets, Credit Crunch, Crisis, Dollar, Dubai, EUR, EURO, FX, inflation, Intervention, Japan, kuwait, Mumbai, Muscat, Nikkie, oman, Record, Sensex, Stock Exchange, uae, United Arab Emirates, US, USD
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The sudden collapse of the US Dollar midday today is sparking new speculations on whether the recent rapid movements in the FX markets will prompt central banks to intervene. In recent news the collapse of the Dollar today and the fear of a global economical collapse prompted world stock markets to decline even further.
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Muscat SM -1.24%
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Kuwait SE -1.08%
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Abu Dhabi SM -1.72%
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Dubai FM -1.65%
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Vietnam Index -4.36%
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Sensex (Bombay SE) -6.03%
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Nikkei 225 -3.71%
Commerz Bank belives that for central bank intervention to become a real threat the Dollar’s Index would need to fall by another 4% within the next 2-3 weeks. Further, the Euro should rise to $1.62
“This is unlikely to happen, however, as we would expect tsignificant bouts of verbal intervention before, preventing a rise to such levels”
- Commerzbank Corporates & Markets
Kuwait inflation reports March 17, 2008
Posted by mylastresort in analysis, rumors.Tags: Central Bank, Commerce and industry minister, economy, Falah Fahd al-Hajeri, inflation, Intervention, kuwait, October, Record, rumors, Subsidies
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In Kuwait inflation has been driven up by external factors such as the rising transport costs due to record oil prices. The commerce and industry minister is hopeful that a decrease in prices will occur. I dont know the basis of the statement but wishing that the price of oil decreases while the dollar is weakening is not the best outcome for a country dependent on Oil. Inflation in Kuwait rose to a record 7.3% in October.
“Inflation is high…there is no doubt that inflation (in Kuwait) has been affected by global inflation, rising oil prices and a hike in transport (prices)”
- Falah Fahd al-Hajeri
Concerned about the inflation, the Kuwaiti government, increased subsidies on some food items and building materials such as steel and cement.
– UPDATE: Breaking News regarding Kuwait inflation rate
Kuwait Inflation Rate hits a 15-year high of 7.3% (based on figures for first 9 months of 2007). Here is the breakdown:
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Housing 12.5%
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Education & Health 12.3%
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Drinks & Tobacco 9.6%
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Transport 7.3%
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Clothing 5.1%
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Food Products 4.8%
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Products & Services 2.5%
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Rumors in the market are that the inflation rate for the first 3 months of 2008 is at around 9%.
U.S. Federal Reserve feeds cash starved credit markets March 12, 2008
Posted by mylastresort in analysis.Tags: Asian, Central Banks, Crash, Credits Markets, Dow Jones Industrial, Intervention, Investments, Jakarta, Nasdaq, Nikkei 225 Index, S&P, Sensex, US Federal Reserve, USD
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The U.S. Federal Reserve and four other central banks on Tuesday teamed up to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans. Stocks surged, bonds fell and the long-suffering U.S. dollar soared in reaction to the moves, a sign financial markets saw the plan as a step in the right direction to ease a crisis that has threatened world economic growth. The effects on the stock markets are as follows:
- Dow Jones Industrials +3.55%
- S & P 500 Index +3.71%
- Nasdaq 100 +4.06%
The first markets to open after the US would be the East Asian Economies thus far in the day the Nikkei 225 Index is up 1.70%, Sensex up 2.15%, & the Jakarta IDX is at 1.95%…
