Kuwait market reform move lauded

Country activates new round of market shake-up targeting investors and IPOs

Changes to Kuwait’s equities market are taking the stock exchange “to the next level,” according to one of the country’s biggest investors.

Kuwait this week activated the latest round of a market shake-up aimed at attracting investors and initial public offerings. While Kuwait’s new benchmark index has fallen each day since its April 1 debut and is set for a loss of 4 per cent in the past four sessions, the stocks look attractive in the medium- to long-term, said Husayn Shahrur, managing director for Middle East and North Africa at NBK Capital. That’s because the country’s economic fundamentals are stronger than its neighbours’, he said.

NBK Capital is the money management unit of National Bank of Kuwait, the biggest lender in the Gulf state. The firm oversaw about $6.4 billion (Dh23.5 billion) as of the end of 2016.

“The market is now divided into three segments [Premier, Main, and Auction Markets], with the Premier Market composed of the largest and most liquid companies. The market segmentation is designed to incentivise companies to improve liquidity and transparency.

Performance

Boursa Kuwait introduced new indexes designed primarily to measure the performance of the new market segments and the market as a whole. Unlike the old price index, all indexes will be market capitalisation-weighted to better reflect market performance. Boursa Kuwait has also adopted circuit breakers,” Shahrur said.

“All these changes are important to take Boursa Kuwait to the next level. They came after the recent promotion of Boursa Kuwait by FTSE to emerging market from a frontier market, which will be implemented over two phases in September and December. The Capital Markets Authority and Boursa Kuwait are working on additional changes to further improve the operational infrastructure of the bourse,” he added.