Webcast takes stock of Boursa Kuwait
KUWAIT CITY, Nov 16: S&P Global Rating in collaboration with GOVERN, the regional centre for economic and corporate governance, organized a webcast delving on issues pertaining to capital market and corporate governance in Kuwait and GCC in general. The event is the third in a series of webcasts to be delivered throughout 2017.
The speakers included Mubarak A. Al-Refaei, Director of Corporate Finance & Governance, Capital Markets Authority, Kuwait, Goeksenin Karagoez, Director, Financial Institutions Ratings, S&P Global Ratings, Alissa Amico, Managing Director, GOVERN, Raghu Mandagolathur, Head of Research, Kuwait Financial Center, Markaz and Tommy Trask, Director, Corporate Ratings, S&P Global Ratings and was moderated by Hadi Melki, Managing Director & Regional Head Middle East, S&P Global Ratings.
Kuwait equity market marked a milestone when the Kuwait Stock Exchange’s ownership transitioned to Boursa Kuwait in 2016. In its endeavor to improve and fine tune the functioning of stock market, the Capital Market Authority issued a new Corporate Governance Code in 2015 and the Corporate Law was updated on several occasions in recent years, last being in 2017. In light of these initiative, the Kuwaiti capital market has been updated to the Emerging Market Status by some index providers with the expectation that this will result in greater foreign institutional capital inflows.
The speakers took a close look at the implications of the ongoing ownership restructuring of the Kuwaiti stock exchange, expected evolutions in terms of institutional investor presence and inflows, the corporate governance framework in Kuwait vis-à-vis the GCC and other growth markets, the impact of recent regulatory change on company governance practices and their investability.
Al–Refaei highlighted the journey of Capital Markets Authority in enforcing the CMA codes for corporate governance and transparency. Underlining the emergence of framework for capital markets in Kuwait, he said that phenomenal developments were seen over the last few years in terms of legislations after “complete absence of any workable, meaningful rules” in that regard. CMA conducted a comprehensive review of resolution 25 of 2015 for corporate governance in accordance with international best practices and requirements of local market and has made a number of amendments. “We have seen a great degree of compliance by the local companies with new rules,” he added.
Raghu on his part examined the performance of the Boursa Kuwait vis-à-vis the GCC peers. In the first nine months of 2017, Boursa recorded a market capitalization of $103 billion as against $894 billion for the whole of GCC. Its worth noting that Kuwait has 180 listed companies as compared to 708 in rest of GCC. He further commented that Kuwait market is making technical improvements to meet the global standards.
The top five market movers was led by National Bank of Kuwait and followed by Kuwait Finance
House, Zain, Ahli United Bank and Agility while the best five performers in terms of returns were Humansoft Holding, NAPESCO, Educational Holding Group, Real Estate Management Co and Inovest.
Detailing the bottlenecks faced by the Kuwait market, Raghu noted that the growth in Kuwait and the region has been flat in last five years Poor research coverage figured next in the downsides facing Kuwait market. Elaborating on the point, he stated that 89.6 pct of stocks in Boursa Kuwait were not covered by any analysts while 8.9 pct were covered by less than 5 analysts. 1.6 pct stocks were covered by more than 5 analysts. Low liquidity and subdued participation by institutional investors too dampened the performance of Kuwait stock market.
Alissa on her part noted that Kuwait has seen enormous changes in corporate market following the introduction of CMA. The key components of corporate governance framework is the Companies Law and Corporate Governance Code. Kuwait is the only jurisdiction in the MENA region to have moved from “mandatory corporate governance requirements to more of a compliance plane,” she added.