The Economist Intelligence of the British magazine, The Economist, says the Kuwait Stock Exchange was the second-best performer among some of the world’s largest stock exchanges over the past 12 months.
The data issued by the research unit stated that the performance of the Gulf stock markets, led by the Abu Dhabi Stock Exchange and the Kuwait Stock Exchange, outperformed the American “Standard & Poor’s 500” indices and the “Euro S&P 350” index of European shares from May 2021 to May 2022, reports a local Arabic daily.
The report added that all stock markets in the Gulf countries remained high by more than 10 percent in the mentioned period ending in May 2022 – where the Abu Dhabi market topped the Gulf stock exchanges after achieving gains of 55.3%, followed by the Kuwait Stock Exchange with gains of more than 25 percent.
After peaking at the end of 2021, the US and European stock markets witnessed a sharp decline as the war in Ukraine and tightening monetary policy weighed on investor sentiment and weakened growth prospects.
The performance of the oil-dominated Gulf stock markets, according to the analysts, were better than other global markets, as the rise in energy prices (oil and gas) led to an increase in government revenues and an increase in spending, and the return of the current account of these economies to recording large surpluses, which boosted investor confidence.
However, the “Economist Intelligence” indicated that the region is not immune to global headwinds that led to a jolt in US and European stocks, as concerns about global growth are increasing in light of the special policy pursued by China to combat the spread of the Coronavirus and the disruption it causes to growth, while rising inflation around the world is hampering consumption, forcing central banks to raise interest rates.
Slowing global growth threatens to weaken oil prices, which is causing concern, especially in oil-dominated stock markets.
The analysis expected the Federal Reserve to raise interest rates by 250 basis points this year and, given the linkage of its currencies to the US dollar, indicating that the Gulf markets will need to follow the example of the US Federal Reserve, which will also affect growth.
Although inflation is less pronounced than it is in the United States, it has also started to rise in the Gulf countries with the increase in import costs.
Reflecting these emerging pressures, the region’s stock markets retreated from their peak, as the Bahraini market fell 14.1% from its highest levels, Qatar 11.4 percent, Kuwait 9.8 percent, and Saudi Arabia 8.9 percent.
The Economist Intelligence believes that the Gulf markets remain in a positive year-on-year basis at the moment, and that despite emerging growth concerns, higher oil prices will provide some support for them, which the unit expects to remain above $100 per barrel this year as the war continues in Ukraine.