KUWAIT STOCK EXCHANGE
Kuwait Stock Exchange (KSE) is the national stock market of The State of Kuwait.
Although several shareholding companies (such as NBK in 1952) existed in Kuwait
prior to the creation of the KSE, it was not until October 1962 that a law was
passed to organize the country's stock market.
Initially, the Kuwait Clearing Company (KCC) was established in 1982 and
the Kuwait Stock Exchange was established in 1984 in a formal way. Kuwait
Clearing Company S.A.K. (KCC), is the central clearing, settlement and
depository entity for the Kuwaiti securities market, and provides clearing,
settlement and depository services for all securities and derivatives in the
market. The Exchange is open for
trading from Sunday to Thursday between 9.00 am to 12.30 pm. The Exchange also
has a forward market which starts at 12.55 pm and closes at 13.15 pm. The Kuwait
Stock Exchange currently operates a (T+0) settlement period. This process
facilitates KCC to debit and credit investors accounts on settlement (T+0), and
to implement delivery versus payment process. According to the Kuwaiti law,
prior to placing an order in the market, an investor is required to have
sufficient securities for a sell trade and cash for a buy trade in the account
to cover obligations. In the event of late payments, investor may deposit his
shares or cash without penalty by 11:00 a.m. on T+1.
desiring to get listed on the Kuwait Stock Exchange should meet the following
The company’s paid-up capital
shall not be less than KD 10 million or any equivalent amount in foreign
currency, and the shareholders’ equity shall not be less than 115% of the
paid-up capital in each of the last three years, according to the audited
financial reports prior to the listing request.
The company shall have achieved
net profit in the last two years, and the yearly net profit shall not be less
than 7.5% of the paid-up capital.
If the listing request is from a
closed company which had increased its capital more than 50%, a period of one
year should have passed from the date of notice in the commercial registry.
Not less than 30% of the
company’s capital shall be offered for private placement by a specialized
company independent from the company that requested listing according to the
procedures set by the Market management in this regard.
there are 184 Kuwaiti, 16 non-Kuwaiti companies and 1 mutual fund listed on the
Kuwait Stock Exchange. Besides the
above, there are 14 companies listed on the Parallel Market. There are 14
brokerage companies operating in the Kuwait Stock Exchange. Share prices are not
allowed to fluctuate more than 5% in a single trading session. If this limit is
reached, dealings in the share are suspended until the next day. The minimum
value to be traded per transaction is K.D.2,000/- and the average commission is
0.1125% but this can be lower for large value transactions. Shares are grouped
into 8 sectors i.e., Banking, Investment, Insurance, Real Estate, Industry,
Services, Foodstuff and Non-Kuwaiti.
CAPITALIZATION AND GDP
total market capitalization of the Kuwait Stock Exchange increased consistently
from US$ 59.5 billion in 2003 to US$ 123.8 billion in 2005. However, as the
market witnessed some downward price corrections during 2006, the market
capitalization declined to US$ 105.9 billion.
During 2007, the market capitalization reached an all time high of US$
135.6 billion. During the current year, until the end of September 30, 2008, the
market capitalization has declined to US$ 103.23 billion. On the other hand,
Gross Domestic Product at current prices witnessed consistent increase over the
past few years from US$ 47.8 billion in 2003 to an estimated US$ 139.3 billion
in 2008. The market capitalization to GDP ratio of Kuwait Stock Exchange was
around 124% in 2003 and improved to 153% by 2005. However, subsequently this
ratio has fallen to 104%, 121% and 74% during 2006, 2007 and 2008 (QIII).
Companies and Market Capitalization
of listed companies on the Kuwait 108 in 2003 to 201 in 2008(QIII). Over the
same period, the market capitalization of listed companies witnessed an increase
of 73.5% only, mainly on account of the decline in prices during 2006 and in the
current year. The increase in new
company listings could not bring the market out of the gloom resulting from the
decline in stock prices particularly during the current year.
Appreciation and Turnover
Stock Exchange witnessed strong price appreciation particularly in 2003 when the
Kuwait Stock Exchange Index appreciated by 104.9%. During 2004 and 2005, the
market appreciated by 33.8% and 79.9% but declined 12% during 2006. The market
index witnessed a gain of 24.7% in 2007. However, during the current year, on
account of the global credit crunch and the looming recession, the market
started correcting since May and until the end of September 2008, the market had
a year-to-date yield of 2.23% only. The Kuwait Stock Exchange’s turnover was
US$ 55.14 billion in 2003, but declined marginally to US$ 51.84 billion in 2004.
The next year recorded significant increase in turnover to US$ 97.34 billion but
again turnover fell to US$ 59.6 billion in 2006. During the year 2007, Kuwait
Stock Exchange achieved the highest turnover of US$ 130.14 billion. Despite the
uncertainties caused by the credit crisis and inflation, the market turnover for
the 9 month ended September 2008 was US$ 110.9 billion.
one of the most developed stock markets in the Gulf region, the Kuwait Stock
Exchange had less speculative
activities and low daily volatility of less than 1% during the past five years.
During 2008, the daily volatility remained less than 1% until September and
October, when it increased to 1.7% and 1.9%, respectively.
Similarly, intra-month variations remained low within the range of 3.24%
(April) and 13.62% (January) but increased sharply to 28.5% and 38.5% during
September and October, respectively.
Valuation Levels and Future Outlook
Kuwait Stock Exchange being one of the oldest stock markets in the Gulf has
better liquidity and trading history compared to many of its counter parts.
Currently, the valuation levels in this
market are very attractive following the current year’s market decline on
account of the recent global market turmoil.
In addition to the above, we are expecting more and more new companies
being listed in the coming years as Kuwait is expected to raise fiscal spending
and the government will cautiously seek to encourage some additional foreign