KUWAIT: By the end of November 2020, the 8th month of the current fiscal year 2020/2021 ended and the average price for Kuwaiti oil for November scored $43.1 per barrel. The current fiscal year (April 2020 - November 2020) achieved an average price for Kuwaiti oil at $36.4 per barrel, which is higher by $6.4 or by 21.4 percent than the new hypothetical price estimated in the current budget at $30 per barrel, while it is lower by $18.6 or by 33.8 percent than the hypothetical price for the previous fiscal year at $55 per barrel.
The average price for Kuwaiti oil during the past fiscal year 2019/2020 scored $61.6 per barrel, and the average price for the first eight months of the current fiscal year 2020/2021 is lower by 40.9 percent or by $25.2 per barrel than the average price for the past fiscal year. Also, it is lower by 57.7 percent or by $49.6 per barrel than the new budget's parity price at $86 per barrel, according to the Ministry of Finance after deducting 10 percent to the future generations' reserve.
Kuwait is supposed to have achieved actual oil revenues in November by KD 642.5 million. Assuming that production and prices would continue at the current levels -- an unrealistic assumption -- Kuwait's oil revenues for the entire fiscal year would amount to KD 6.1 billion, after deducting production cost for the entire year. This is KD 456.3 million higher than the estimated for the current budget in the amount of KD 5.6 billion.
Adding KD 1.9 billion in non-oil revenues, total budget revenues for the current fiscal year would score KD 8 billion. Comparing this figure with the expenditures allocations in the amount of KD 21.5 billion, it would be likely that the public budget would score a deficit by KD 13.6 billion. However, eight months are good enough only to be used as an indicator to the hypothetical deficit of the budget, considering the negative effect of the current pandemic on oil prices.
Actual deficit will be a variable subject to the movement of prices and oil production during the remaining part of the fiscal year. It is almost certain that the actual deficit will be large and in double figures, but it may be less than the mentioned figure due to the possibility of higher oil prices for the remainder of the fiscal year.
Parliamentary elections
Kuwait's parliamentary elections took place on December 5th 2020. The results showed 62 percent significant change, including a change resulting from the reluctance of five previous members to participate. Despite the high change rate, the results show four times recurrence since 1992. Therefore, the importance of the current change comes from its quality and not its volume.
The National Assembly is the second wing of public administration. Reading in the polling results suggests that it combined both positive and negative aspects. Its effect, which coincides with a new era, perhaps makes the results tend to the positive side when the results are read correctly.
On the positive side, the exclusion of a large number of faces known or accused of proven corruption and addiction to reaping services and positions in state institutions without any right. On the positive side, some phenomena emerged in some constituencies that surpassed in their voting hateful, sectarian, regional, or factional barriers. Examples include MP "Hassan Jawhar" in the First District and MP "Abdul Karim Al-Kandari" in the Third District.
The most exemplary is in the Fourth and the Fifth Districts from those who won from outside the primaries. The positive side also, which is an indicator in favor of the new era suggests unprecedented neutrality of the government and the influential people around it from the impact of intervention with money or services on the election outcomes.
In conclusion, Kuwait inherited an unprecedented situation as it is facing an extremely dangerous economic and financial challenge similar to the internal and regional political conditions. The more important element to confront that challenge will be decided by the quality of the most important public administration wing, i.e. the government. The government needs only 17 deputies to pass what it wants.
If its formation comes on par with the size of that challenge, it will impose its respect and win the council's cooperation in a way that promotes the country's path to a safe future. The matter now needs sacrifices that come through harmony. It should be a good example. However, if the government of genes and quotas returns, then any National Assembly's formation will be useless. The country may not have another reform opportunity.
Trading features at Boursa Kuwait
Kuwait Clearing Company (KCC) issued its report regarding "Trading Volume According to Nationality and Category" for the period of 01/01/2020 to 30/11/2020, as published on the official website of Boursa Kuwait. The report indicated that individuals still form the largest trading category.
They captured 39.2 percent of total value of sold shares (44.5 percent First 11 months of 2019) and 38.1 percent of total value of purchased shares (40.6 percent First 11 months of Months 2019). Individual traders sold shares amounting KD 3.864 billion and purchased shares worth KD 3.765 billion, with a net trading value of selling by KD 99.824 million.
The second largest contributor to the market's liquidity is the institutions and companies sector which captured 35.2 percent of total value of purchased shares (30 percent for the same period of 2019) and 30.8 percent of total value of sold shares (22.1 percent for the same period of 2019). This sector purchased shares worth KD 3.474 billion and sold shares worth KD 3.038 billion, being the only sector with purchased trading value of KD 435.592 million.
The third contributor to market liquidity is the clients' accounts (portfolios) sector which captured 23.1 percent of total value of sold shares (26.4 percent for the same period of 2019) and 22.4 percent of total value of purchased shares (23.1 percent for the same period of 2019). This sector sold shares worth KD 2.284 billion and purchased shares worth KD 2.212 billion, with a net selling trading value of KD 72.143 million.
The last contributor to liquidity is the investment funds sector which captured 6.9 percent of total value of sold shares (7.1 percent for the same period of 2019) and 4.2 percent of total value of purchased shares (6.2 percent for the same period of 2019). This sector sold shares worth KD 682.472 million and purchased shares worth KD 418.847 million, the most net sold trading value of KD 263.625 million.
Boursa Kuwait performance
The performance of Boursa Kuwait for last week was mixed where the traded value, traded volume and number of transactions decreased, while the general index increased (AlShall index). AlShall Index (value weighted) closed at 488.1 points as of last Thursday, showing a rise by 1.3 points or by 0.3 percent compared with its level last week. While it remained lower by 65.1 points or by 11.8 percent compared with the end of 2019.