value-tradedKUWAIT: The Ministry of Finance issued the monthly follow-up report for the State's Financial Administration Accounts until November 2015 (published on its website), the Ministry of Finance indicates a substantial drop in revenues. Until 30/11/2015, eight months of the current fiscal year 2015/2016, total collected revenues amounted to approximately KD 10.420 billion, about 85.3% of the total estimated revenues for the entire current fiscal year in the amount of approximately KD 12.2106 billion, with a noticeable decline by -45.2% below the total collected revenues during the same period of last fiscal year 2014/2015 in the amount of KD 19.027 billion.

In detail, the bulletin estimates actual oil revenues until 30/11/2015 by about KD 9.681 billion, i.e. 90% of estimated oil revenues for the entire current fiscal year in the amount of KD 10.7575 billion, or about 92.9% of total collected revenues. The collected amounts from oil revenues during the first eight months of the current fiscal year -at an average price of Kuwaiti oil at US$ 49.9 per barrel- were less by KD 8.268 billion, -46.1%, than its counterpart value last fiscal year. KD 739.3 million was collected from non-oil revenues during the same period, a monthly average at KD 92.413 million while the total estimated amount for the entire fiscal year was about KD 1.453 billion. This means the realized amount will be less for the entire fiscal year by about KD 344 million than the estimated amount.

Expenditures allocations for the current fiscal year were estimated at about KD 19.171 billion, of which an amount of KD 6.645 billion was actually spent -according to the bulletin- until 30/11/2015, a monthly spending average at KD 830.635 million. We, however, do not recommend relying on this figure because there are expenses which have become due but have not been actually paid. Spending in the last month of the fiscal year will be higher when settlements are made and then in the final account.

Although the bulletin concludes that the budget surplus in end of the first eight months of the current fiscal year scored about KD 3.775 billion, we publish it without recommending its endorsement as we believe that the surplus figure will change into deficit in the end of the these eight months, and until the fiscal year end, and with the issuance of the final account.

In fact, the current fiscal year will witness a fundamental and negative difference with the budget deficit scoring about KD 4 billion. The deficit figure will be affected positively, i.e. will increase, if oil prices continue their decline but will be affected negatively i.e. will decrease, by the amount of actual saving in the expenses by less than the estimated.

KSE Liquidity Features

By the end of 2015, KSE added to its liquidity in December 2015 -trading value- about KD 241.7 million, about 6.5% of its total liquidity in the preceding eleven months of the year 2015, and brought the total of the year 2015 market liquidity to KD 3.962 billion. This means that 2015 liquidity dropped by -35.2% compared with 2014. The drop in the liquidity was caused by weak confidence in the market, the drop in oil prices below US$ 30 per barrel in the last month of the year, and the continued escalated violence curve in the region.

Adopting the same measurement tool, ie following up the share of the top 30 companies in trading value, we note a noticeable reduction in liquidity deviation despite its unjustifiable continuity. Those companies captured 72%, KD 2.851 billion, of market liquidity, representing about 67.3% of its total market capitalization value. The number of speculative companies within the sample was 16 companies, which captured about 32.2% of total market trading value, about KD 1.277 billion whereas their market value scored only 10.5% of total market capitalization value compared with 17 speculative companies which captured 3.4% of market capitalization value and 23% of 2014 market liquidity.

This drop in concentration on speculation companies in 2015 extended to their share turnover rates though they remained high. While the turnover average of all market companies continued weak at about 15.1% and weak even to the 30-companies sample with the highest liquidity at 16.2%, it scored about 46.5% to the 16 companies. It scored about 1508.8% for the highest company, 1171.1% for the second highest and 938.1% for the third highest. Despite their high rates, they remain lower than the turnover rate of this sample of companies (30-companies) in 2014 which was 21.9%.

Development of events with Iran

After the attack on the Saudi Embassy in Tehran and the Saudi Consulate in Mashhad, Iran, KSA severed diplomatic relations with Iran and so did Bahrain. UAE, Kuwait and Qatar downgraded their diplomatic representation in Iran by summoning their ambassadors there. Though we are not concerned with the political side, the stability of the region serves the region's people. In addition to severing diplomatic relations with Iran, Saudi Arabia and Bahrain also suspended trade dealing with Iran. It is unlikely that the other 4 GCC states will follow suit neither is it likely for Oman to downgrade its diplomatic representation.

Excluding the UAE, the commodity trade dealing between Iran and GCC states does not seem substantial or influential. According to the official site of Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM) for the Persian year 1393 (March 2014-March 2015), total trade scored about US$ 16.6 billion. In details, GCC states exported US$ 11.735 billion worth of goods to Iran and imported what is worth US$ 4.848 billion, with a trade balance surplus in favor of the GCC states by about US$ 6.887 billion. These figures do not carry a big significance if we exclude the UAE whose share out of total exports scored about US$ 11.208 billion, about 95.5%, of total GCC exports to Iran. On the other hand, UAE imported about US$ 4.064 billion, 83.8%, of total GCC imports from Iran. These figures do not include the huge figures of UAE re-exports to Iran.

Figures of service trade are not available such as religious trade, and entertainment tourism. We do not know if the boycott would include them if we exclude the pilgrimage season. While religious tourism is common between other GCC states and Iran, UAE remains the important destination for trade and entertainment tourism. UAE represents the main destination for Iran's capital exports, the headquarters for some private Iranian institutions and some Iranian businessmen. Therefore, the trade and service relations weapon, without the UAE, remains psychological and political only and not material. UAE enjoys a huge surplus in its commodities and service trade with Iran; therefore, it is unexpected to impose a sanction and pays for it. The above figures are obtained from one source and are subject to verification and review. We are prepared to correct them if we get another

source that provides different figures though we do not believe that the bottom line would differ.

Indirect consequences of increased tension in the region are more serious. After the late political confrontation, the likelihood of increased struggle pace and area is greater. On the one hand, it means allocating more resources, which have become scarce, to finance the security and military conflict. On the other, it means fewer prospects for compromise and coordination to reduce the surplus of traditional oil supplies which in turn means continued weak oil prices. Both factors have far reaching negative impacts on the stability of the region and all its individual states in the medium to long terms.

Comparative Performance

2015 ended and was characterized by weak performance of capital markets within the sample. Out of 14 markets only 4 markets achieved positive performance, less than 10%, and 10 remained in the negative zone. During the year, sorting performance in favor of mature and emerging markets continued while the Gulf markets' performance lagged and 6 Gulf markets occupied the bottom of negative performance with 2-digit losses. The Indian market joined them as No. 7 in losses.

The German market took the lead in winning markets by adding 9.6% in a full year. The Chinese market with 9.4% came second due to the artificial support from the Chinese authorities after the huge losses in the beginning of summer. And so did the Japanese and French markets by 9.1% and 8.5% gains respectively. Though the four markets benefit from the extreme weakness of the oil market, the drop in the Chinese growth rates -the biggest global trade partner- the weak performance of the European economy due to the sovereign debt problems and the late influx of immigration which threatens its solidarity, turned the performance of the majority of their markets into negative in last December when the French market lost -6.5% in one month, the German -5.6%, and the Japanese -3.6%.

In the negative zone where the 7 GCC markets are, the Saudi market achieved the highest loss by losing -17.1% in 2015. Dubai market came second in losses by -16.5%, Qatar by -15.1%. Three other markets achieved close results: Muscat and Bahrain markets lost -14.8% each and Kuwait's weighted index lost -13%. Only Abu Dhabi achieved less loss by -4.9% and came 6th among the sample markets. The weak performance of the regional markets is due to the accelerated weakness of the oil market, the doubt in their capability to confront the requirements of fundamental reform this time, and the fear from a disturbed geopolitical environment which is getting hotter.

Forecasting performance of a forthcoming year is extremely difficult. Partial changes in each country are no longer dominant but to total changes at a global or regional level whose direction is difficult to know such as the likely performance of the oil market after the battle has become one of bone-breaking among traditional producers, the violent hot conflicts, both direct and the ones by proxy. If last December's performance fits to be index for the early months of the current year, contrary to the norm, the performance of 12 markets out of 14 in the sample was negative in December. This means that indexes imply weak performance and mostly negative in the current year. Nevertheless, there is probable positive performance if geopolitical conditions get relaxed through a political conciliation among main traditional oil producers.

The Weekly Performance

The performance of Kuwait Stock Exchange (KSE) for the last week (4 working days due to New Year Holiday) was mixed compared to the previous one, where the indices of the trade volume, the number of transactions index and the general index, show a decrease, while the trade value index shows an increase. AlShall Index (value index) closed at 356 points at the closing of last Thursday, showing a decrease of about 9.9 points or about 2.7% compared with its level last week (end of 2015).