Monday , November 20 2017

Kuwait expects an inflow of $1 bln of foreign investment – Market gears up for possible upgrade in FTSE Emerging Markets Index

KUWAIT CITY, Sept 27: The Kuwait Stock Exchange is waiting for a $1 billion inflow of foreign investment following the announcement of a possible rise in the FTSE Emerging Markets Index, which will be announced on Friday after the US markets close, reports Al-Anba daily quoting an unnamed source.

The market is being upgraded to emerging market indices, listed one year after the announcement, but pointed out that the listing has nothing to do with the start of the influx of foreign investments, which is expected to begin next week.

The expectations of the size of foreign investment are expected to increase in the event of an upgrade. The Hermes Research predicted that Kuwait’s share in the case of upgrading of the FTSE index would reach 0.5%, a forecast of $740 million in foreign investments.

The Arqam Capital Research said the value of investments reached $455 million with a relative weight of 0.54% for the Kuwait Stock Exchange of the total weight of the index.

The source pointed out that the Kuwaiti Stock Exchange in cooperation with the Capital Markets Authority during the past period, which led to significant amendments to the trading system, began in the current year, and is a major reason for the entry of the Kuwait Stock Exchange in emerging market indicators, noting that liquidity will not be a barrier for promotion contrary to the unanimous reports of research companies.

The latest reports issued by QNB said that due to the low liquidity constraints in the Kuwait Stock Exchange during the past period, the FTSE Emerging Markets Index, which is expected to be announced on Friday, will follow a phased approach by including 50 percent of the weight included in September 2018 and 50 percent March 2019, citing the Qatari market which has taken almost the same steps for listing.

The QNB report cited Qatar Stock Exchange’s attempt to take the same steps. The market’s low liquidity led to the completion of Qatar’s two-share market upgrade following the September 2015 promotion announcement, which included 50% of the index weight in September 2016 and 50% 2017.

Commenting on the sharp declines witnessed by the KSE in the first two trading sessions this week, sources stressed that there are investors and major governors who wish to provide sufficient liquidity, taking advantage of the past gains and achieve a profit to help them enter the expected cycle of rise during the fourth quarter of the year after the announcement of promotion.

The Kuwait Stock Exchange lost 689 million dinars from its market value of $2.23 billion (about 2 percent of GDP and 30 percent of external public debt) during the first two sessions of the week alone.

The market value of the KSE closed yesterday at 29.28 billion dinars, to lose in Monday’s session only 360 million dinars, while it had lost 329 million dinars in Sunday’s trading, bringing the total loss in the sessions 689 million dinars.

The decline coincided with the announcement that the FTSE index may be delayed, while some experts attributed it to the regional tensions associated with the Kurdistan Regional Autonomy referendum and the other to profit from the gains that the stock has gained in recent weeks.

Most of the upgraded markets are listed on the index one year after the announcement. The efforts of the Kuwait Stock Exchange and the Commission supported the promotion of the FTSE Emerging Markets Index.

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