45+ Listed Firms Turn to Treasury Stocks as Boursa Kuwait Activity Slumps in Q3

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KUWAIT CITY, Oct 30: Decline in activities in the third quarter at Boursa Kuwait — the stock exchange — had led over 45 listed companies to active the financial tool of treasury stocks to regain price levels.
The decline was attributed to various technical aspects and geopolitical reasons.
Treasury stocks are previously owned stocks by companies bought back from shareholders.
This leads to the decrease of outstanding shares — stocks authorized, issued, and bought by investors — in the open market.

In this regard, economists told KUNA during separate interviews that the decision to active treasury stocks was to maintain and secure shareholders’ finances from being affected by global crises where financial tools were endangered.
The activation of treasury stocks was due to companies knowing the results of their annual activities and profits, which leads to an increase in share values and planned distribution at the end of the year, said economist Nayef Al-Enizi.
Al-Enizi indicated that the companies opting for treasury stocks had positive estimations for the last nine months of 2023; therefore, such companies were keen on retaining the stocks and selling or distributing them when the value goes up to make a profit.

He also noted that the huge decline of stocks caused concerns for main share-owners, who feared their financial position being shaken in front of banks and other shareholders, leading to finding means to project their secure position for those involved in the market.
Most companies try to show their security in light of the recent decline of stocks due to geopolitical reasons, he indicated.
On his party, financial analyst, Haitham Al-Shakhs said that activating the treasury stock purchase by no more than 10 percent gave companies leeway to move financially in the future.
The step would also lead to distributing stocks for shareholders and companies to enable them to regain composure.

Mohammad Al-Tarrah — financial analyst and head of the shareholders society — revealed that the decision would enable companies to distribute stocks in the form of free shares as well as increase the value of treasury shares via decreasing the price of listed stocks, which is a luring factor for investors.
He noted that the activation of treasury stocks would create a sense of calm amongst investors and increase their trust in companies, which took this route.
According to the Capital Markets Authority, treasury stocks could be bought and sold via the official Boursa Kuwait platform.
The authority saw that activating such shares would maintain the prices of stocks, decrease capital, or distribute shares as a grant. (KUNA)

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