Kuwait on track for more market openness

The best performer in the region is now considering an IPO

In a challenging year for Arabian Gulf equities, Kuwait’s stock market has been the region’s clear standout. The country’s equities are on track for their best year since 2013, currently trading 11 per cent higher for the year.

Bahrain, the region’s next best performer, is up by less than 4 per cent.

The success of Kuwaiti equities – led by big names such as Human Soft, National Petroleum Services and Agility – was complemented in September, when the country was included in the FTSE Russell Emerging Markets Index.

The inclusion marked the culmination of a series of market reforms conducted by Boursa Kuwait; it signed a partnership in 2016 with Thomson Reuters to enhance market transparency, a theme

Kuwaiti equities were complemented in September, when they were included in the FTSE Russell EM Index

carried over into its other reform processes. Fresh regulations on market-making and new trading rules have been developed with unprecedented input from the private sector.

It therefore came as little surprise yesterday when Kuwait’s Capital Markets Authority announced a tender for the advisory services mandate for the sale of a stake in the exchange, making it the latest bourse to go down the privatisation route.

The announcement followed days after similar remarks made by Oman’ stock market regulator about a sell-off in a stake in the Muscat Securities Market, ultimate ownership of which will be transferred to the country’s State General Reserve Fund.

Saudi Arabia, the region’s biggest economy, is expected next year to also press ahead with an IPO of an undisclosed stake in Tadawul, the region’s largest stock market by market capitalisation. This coincides with the Saudi bourse’s bids for inclusion in the widely-tracked emerging market indices of both FTSE and MSCI.

The sell-off of shares in stock markets makes perfect sense for Gulf governments, as part of a wider privatisation programme to diversify economies and attract higher levels of investment from outside investors.

It’s been more than 10 years since the Dubai Financial Market became the first – and so far only – exchange in the region to publicly list shares in itself. The race is on to see who will be second.