Kuwait Financial Centre “Markaz” released its Monthly Market Review report for January 2025. Kuwait equities outperformed global and GCC markets driven by the anticipation of strong earnings of banking stocks and the increased deal activity in the energy and real estate sectors, with most sectors closing the month in positive territory. Kuwait’s All Share Index posted a monthly gain of 5.7%, outperforming other GCC equity indices. This was supported by the movement in key sectors like oil & gas, real estate, consumer discretionary and banking sectors which gained 11.7%, 11.1%, 7.6% and 7.3% respectively during January 2025.
Among the real estate stocks, Commercial Real Estate Co and Kuwait Real Estate Company were the biggest gainers, with a monthly return of 33.1% and 28.9% respectively. During the month, Kuwait Real Estate Company launched ‘Tilal Al Tai’ project in Sharjah with a value of AED 3.5 billion (KWD 294 million). The company also obtained approval from the Capital Market Authority (CMA) to deal in treasury shares. Commercial real estate company got qualified to enter the tender regarding the Mubarakiya Market Development project and received approval to develop the Salmiya Boulevard Park. Kuwait Oil Company’s discovery of hydrocarbon resources at the Al-Jlaiaa offshore field has been a notable progress in Kuwait’s energy industry. Kuwait is also planning to consolidate its oil companies in the beginning of 2025-26 fiscal year as a part of its restructuring program. Among banking stocks, Warba Bank and Burgan Bank were the biggest gainers, with a monthly return of 22.9% and 17.6% respectively. Warba Bank acquired a 32.75% stake in Gulf Bank that was previously held by Al Ghanim trading company while Burgan Bank is set to wholly acquire United Gulf Bank by the first quarter of 2025. As a result, Gulf Bank and Boubyan Bank have mutually agreed to call off their potential merger. Kuwait’s Main Market Index increased by 5.1% during January 2025, while the premier market index recorded a return of 5.9%. Kuwait’s inflation accelerated to 2.5% y/y in December 2024, compared to 2.36% y/y in November 2024. The uptick can be attributed to the cost increase in miscellaneous goods & services, clothing & footwear and food & beverage industry.
The S&P GCC Composite index rose by 3% in January with all major GCC markets ending positively. Saudi equity index gained 3.1% during the month. Saudi Telecom Company and Etihad Etisalat Company were the top gainers among Saudi blue chips, with gains of 8.7% and 8.4% respectively during January 2025. On the other hand, Saudi Aramco dipped by 0.9% during the month, due to the delay in phasing out OPEC+ cuts. Abu Dhabi’s equity index gained 1.8% in January 2025, supported by the strong performance of the banking sector stocks. Abu Dhabi Commercial Bank gained 14.9% during January 2025 supported by a 26% increase in net profits for 2024. Qatar and Dubai indices gained 0.9% and 0.4%, respectively, during the month. Bahrain’s index fell by 5.4% during the month due to the decline of Aluminum Bahrain (Alba)’s stock by 18.5%, after officially terminating the proposed deal with Saudi Arabian Mining Company (Ma’aden).
GCC is undergoing a major fiscal transformation through the implementation of new tax regimes. As a part of OECD’s global minimum tax rate agreement with around 136 signatories, a minimum tax rate of 15% is to be levied on large multinational corporations with global turnover of over EUR 750 million, irrespective of their region of operation. Kuwait, UAE and Bahrain executed the new tax law with effect from 1st January 2025. Qatar and Oman have started working towards adoption of the new tax law. President Trump’s retaliation against the global minimum tax regime has spurred uncertainty in relation to its implications on OECD’s further strategies. Lack of US participation in this framework might affect the global application of such law.
U.S Federal Open Market Committee (FOMC) meeting was held on 29th January 2025 during which it was decided to hold the interest rates steady. The FOMC committee stated that the labor market conditions remain stable, and a balance has been obtained between inflation and employment targets, which led to its neutral stance in changing the policy rates. The central banks in GCC have also aligned with the U.S Fed’s decision to hold the interest rates.
Global markets remained positive during January 2025. MSCI World and S&P 500 indices gained 3.5% and 2.7% respectively. Microsoft shares rose by 4.1%, while Apple declined by 5.09%. Deepseek, China’s Artificial Intelligence (AI) model created turbulence in the U.S stock market by triggering more volatility among the technology stocks. Deepseek’s R1 AI model claims to match the performance of other western AI models, at a significantly lower cost, which has raised question marks over the current AI models that consume very high computing power. NVIDIA’s core business revolving around advanced AI models felt the shockwaves caused by Deepseek, which led to a 10.58% dip in its shares during January 2025. The emergence of Deepseek acts as a threat to the U.S. dominance in generative AI. The MSCI EM index gained 1.7% during the month, despite a 3% fall in Chinese markets. The MSCI EM index gain was supported by South Korea and Taiwan markets, whose main indices gained 4.9% and 2.1% respectively during the month.
U.S inflation was at 2.9% y/y in December 2024, a slight increase compared to 2.7% y/y in November 2024. This can be primarily attributed to the 2.6% and 0.3% rise in energy index and food price index respectively during December 2024. The yield on the 10-year US treasury notes stood at 4.55% at the end of Jan 2025, up by 3 basis points from December 2024 due to the Federal Reserve’s decision to hold interest rates steady. The 10Y yield registered a high of 4.79% during the month as an immediate reaction towards President Trump’s policy comments.
Brent crude oil closed the month at USD 76.8 per barrel, which is a 2.8% increase from December 2024. This move was driven by the U.S energy sanctions against Russian entities. Further clarity on Trump’s trade policies, possible increase in production from the U.S. and the recovery of demand from China will determine the further course of oil prices. Gold prices closed at USD 2,759.3/oz, a gain of 6.8% from December 2024 driven by the increase in purchases by Central banks.
The outlook of global asset classes in the coming months could be shaped by Trump’s trade policies and possible changes in the Fed’s rate cut trajectory. Trump’s conservative trade policies could largely affect emerging markets, triggering capital outflows to the U.S., leading to further depreciation of their currencies against the U.S. Dollar. With China being in the crosshair of Trump’s tariffs, oil prices could take a hit if the demand recovery from China weakens. Weakness in oil prices could alter OPEC+ plans to unwind production cuts, which would in turn affect GCC economies and markets.