FTSE lifts Boursa Kuwait – Inflow of $1.8bn seen possible

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KUWAIT CITY, Sept 30, (KUNA): The Financial Times Stock Exchange (FTSE) Russel has promoted Boursa Kuwait to an emerging market, Chairman of Kuwait’s Capital Markets Authority (CMA) Board of Commissioners Nayef Al-Hajraf tweeted Friday.

Al-Hajraf dedicated the prominent achievement to His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah.

He attributed the merited promotion to the hard efforts the CMA led in cooperation with the Kuwait Clearing Company and Boursa Kuwait (formerly the Kuwait Stock Exchange or KSE).

The promotion comes as the fruit of CMA’s efforts to serve the national economy, he added.

Chairman of Boursa Kuwait Talal Al-Ghanim has affirmed the significance of promoting the bourse to the level of an emerging market. However he cautions that luring foreign capital will require enormous effort.

In a statement released hours after The Financial Times Stock Exchange (FTSE) Russel promoted Boursa Kuwait to an emerging market, Al-Ghanim noted that this accomplishment came “within framework of implementing the Government approach outlined in the document stipulating back-up for financial and economic reforms.” However, the bourse elevation must be followed with greater efforts to attract foreign investments and capital to Kuwait, as an enterprise hub, he stressed, indicating that the national stock market would seek to attain this objective.

Al-Ghanim congratulated His Highness the Amir, His Highness the Crown Prince, the Kuwaiti people and all concerned parties for this substantial historic achievement.

The bourse company executive board and staff have worked diligently to make this much-awaited historic accomplishment a reality, he said, hinting that certain steps have been taken to meet promotion terms and secure necessary data required by the FTSE.

He lauded role of the Capital Market Authority, which contacted international agencies and helped in tackling some problems at the market.

Meeting the FTSE conditions for this qualification, personnel and workers had been busy revamping the stock market infrastructure, upgrading trade rules, boosting transparency and trimming red tape, Al-Ghanim elaborated on the efforts that had been exerted for paving the way for this international certification.

This accomplishment, he explains further, means that all companies enlisted by the bourse will be “under magnifier of global financial agencies, thus encouraging foreign entrepreneurs to increase their investments in the (Kuwaiti) bourse. This in turn will help in pumping new liquidity into the market in short and medium terms.” On the company schemes to revamp the market, he indicated at plans to distribute the companies into three basic markets and creating a new one for the unlisted companies.

He urged licensed companies to create new products to meet desire of local and external investors who sees to boost their investments and savings by targeting new products.

The future “holds better things and the bourse promotion constitutes a certificate of confidence in the Kuwaiti stocks.”

“Kuwait’s reclassification to Secondary Emerging Markets status by FTSE strongly reflects the hard work and efforts it has made to open up to institutional international investors,” says Georges Elhedery, Group General Manager, Deputy Chairman, HBME, and Chief Executive Officer, MENAT.

“HSBC’s Equity Strategists estimate that Kuwait’s inclusion in the Emerging Markets Index could result in net flows of $1.8 billion. The country’s focused approach towards economic reforms will continue to yield positive results as it increasingly gains attention from the region and beyond,” Elhedery added.

Kuwaiti economists foresee significant growth of traded liquidity at Boursa Kuwait after its promotion to the level of an emerging market, thus boosting prospects for a much healthier status of the national economy.

Classifying Boursa Kuwait (formerly named Kuwait Stock Exchange [KSE]) as an emerging market will lure traders eager to invest in the Gulf region’s second key stock market, which comprises large banks and corporates with investments and branches in many countries, Saleh Al-Salmi, Chairman of the International Financial Advisors Company, said in an interview with Kuwait News Agency (KUNA).

By joining the international market, the necessity arises for attracting global investment funds, where many companies that will be enlisted by the FTSE (The Financial Times Stock Exchange) will reap benefits, thus solidifying the local stock market a well those of the other GCC countries, Al-Salmi says.

Muhannad Al-Sanea, Chief Executive Officer at Al-Riyada Investment Company concurred that the Boursa promotion constitutes a significant leap for the Kuwaiti economy, forecasting positive impact on most enlisted leading and operating companies.

Boursa Kuwait’s elevation is the result of the State of Kuwait’s string of economic and legislations’ reforms and amendments, Al-Sanea said. Moreover, the move will turn attention of global investment conglomerates to the Kuwaiti banks and services’ companies, thus the traded liquidity will grow.

He expressed hope that the bourse company would find a formula balancing legislations with facilities for the traders, instead of being stiff in enforcing the regulations.

Salah Al-Sultan, an advisor at Arzak Capital company, eyes the bourse placing at this eminent international status as a “normal fruit” of the steps that have been taken by the Capital Market Authority and the bourse, which is managed by the private sector.

Among the forecast positive results are greater trades, in terms of turnover and number of trades, luring foreign funds; an eventuality that will lead to higher liquidity, he added.

Anticipating the promotion, some traders have been assembling blue chips, particularly those under Kuwait-15 index, he observes, anticipating that this tendency will persist further.

Boursa Kuwait will witness noticeable rebound in the coming week’s sessions, Al-Sultan predicts, also expecting record rally by companies’ shares, expected to be enlisted by the FTSE.

Mohammad Al-Tarrah of the Traders Society affirms that the market promotion will make the Kuwaiti market much more attractive and will result in enlarging the liquidity.

Liquidity, Al-Tarrah believes, will swell to KD 100 million ($327 million) per session, once non-Kuwait investments enter the local market.

Issam Al-Tawari of New Perry Consulting company cautioned that some foreign traders might be concerned about their interests if they join Kuwaiti groups, noting that concern must be devoted to sustainable enlisting by the FTSE, with respect of sensitive factors such as risks, transparency and protecting small investors.

Khaled Al-Khaled, the bourse CEO, has affirmed the approach to meet the terms for promoting the notional bourse, noting that the development would result in increasing the liquidity, shoring up the market and acknowledging the government success in granting leading role for the private sector in developing the economy. The new FTSE status has been a key objective of Boursa since the inception in April last year, he said.

It highlights its mission to enhance the current level of performance in Kuwait, enable Boursa Kuwait to compete with regional peers and build a market reflecting the strength, depth and flexibility of the Kuwaiti private sector, Al-Khaled noted.

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