Sectors Liquidity (January – April 2020)

What applies to the liquidity of Boursa Kuwaiti markets in terms of liquidity deviation properties in general applies to the deviation in its sectors’ liquidity. There are 5 sectors whose liquidity soundness can be seen while there are 7 other sectors with scarce liquidity or trading value. The 5 liquid sectors obtained 97% of the total Boursa Kuwait’s liquidity in the first four months of this year, rising from 96.2% in the first four months of 2019. While the share of non-liquid sectors decreased from 3.8% for the same period in 2019 to 3.0% this year.

Within the active sectors, the banking sector took the lead in terms ofliquidity and its growth rate between the first four months of 2019 and 2020. It acquired 65.4% of Boursa Kuwait’s liquidity during January to April of 2020 (65.9% for the same period of 2019). Its liquidity (trading value), increased in absolute value from KD 1.693 billion until the end of April of 2019 to KD 2.044 billion until the end of April 2020, i.e. increased by 20.7%. While its market cap decreased by -12.6% between the two periods. It contributed by 58.3% to its market cap (59.1% in April 2019).

The second largest liquid sector whose contribution to liquidity exceeded its contribution to the market cap is the industry sector that captured 9.5% of the Boursa Kuwait’s liquidity from the beginning of this year until the end of April 2020 (7.2% for the same period in 2019). Its absolute liquidity increased between the two periods from KD 186.3 million to KD 297.1 million, i.e. by 60.4%.

The third largest liquidity sector whose contribution to liquidity exceeded its contribution to the market cap also is the financial services sector. The liquidity of this sector declined to 9.1% of Boursa Kuwait’s liquidity during the same period of this year versus 11.5% for the same period in 2019. Its absolute liquidity decreased from KD 296.7 million in the first 4 months of 2019 to KD 283.3 million in the same period of 2020, i.e. decreased by -4.5%.

The fourth largest liquidity sector whose contribution to liquidity is less than its contribution to the market cap is the telecommunications sector. This sector obtained 7.8% of the Boursa Kuwait’s liquidity during the same period of this year compared to 5.3% for the same period in 2019. Its absolute liquidity increased between the two periods from KD 136.7 million to KD 243.4 million, i.e. an absolute growth in liquidity by 78%.

The fifth largest sector in liquidity, whose contribution to liquidity is less than its contribution to the market cap is the real estate sector; its liquidity ratio declined to 5.2% during the same period of this year compared to 6.2% for the same period in 2019. Meanwhile, its liquidity increased slightly between the two periods by KD 159.2 million to KD 163.8 million, or by 2.9%.

On the contrary, the contribution of the 7 other sectors to the Boursa Kuwait’s liquidity since the beginning of this year to the end of April 2020 did not exceed 3%. Theconsumer sector was the highest by KD 44.1 million in liquidity; the lowest is the health care sector at a negligible value by only KD 691. The contribution of the 7 sectors to the total value of the market cap scored 7.8%. We believe that filtering those sectors and reducing a number of its non-liquid companies is a worthy goal.