NBK Capital - MENA Markets Review Issue 003 - Jan 2017

MENA Markets Review: January 2017

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Kuwait: February 12, 2017

HIGHLIGHTS

The Kuwait Weighted Index was the best performing GCC index in January up 12.4% as it continues its strong rally since the start of the year
  • Trump’s inauguration speech focuses on economic growth
  • Dow Jones Industrial Average closes over 20,000 for the first time
  • Emerging Markets outperform the UK, Euro Area and Japan
  • Kuwait equity market best performer in the GCC
  • Kuwait and Oman announce budgets for 2017/2018

GLOBAL MACROECONOMICS

Financial markets, especially US markets, had a big runup following the election of Donald Trump on November 8, 2016. Since the election, the S&P 500 Index is up close to 7%, the USD is higher against the EUR, and US interest rates have moved up as well. These moves were backed by positive US data late in 2016, an expected and realized 25 bps rate hike by the Federal Reserve in December, and of course election related optimism. That optimism followed the election of a Republican president, backed by an undivided government in the Congress, promising tax cuts, streamlined regulation, and stimulus spending. Other markets worldwide rose in sync with the US, more or less, with the GCC markets up significantly since the US election, and modestly for the year, led so far this time by Kuwait.

GLOBAL EQUITIES
Global equities continued to improve, as measured by the MSCI All Country World Index, which was up 2.7% for the month of January. U.S. stocks, as measured by the S&P 500, also ended the month of January up 1.8%. The Dow Jones Industrial Average following its strong performance last month, also ended the month of January up 0.5%. After reaching a record level in the month of December 2016, the Dow finally closed above 20,000 for the first time. U.S. data continue to support the Federal Reserve’s position on tighter monetary policy and higher interest rates as the US is close to full employment and moving towards its 2 percent inflation target. Equity markets are reacting to positive sentiment, following Donald Trump’s inauguration on January 20. President Trump’s speech appeared to focus on economic growth including key points such as infrastructure spending and improving labor conditions, reassuring he would deliver on his many promises.

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