Boursa Kuwait feels the pinch as regional tensions mount

KUWAIT CITY, July 28: Current geopolitical tensions are casting a heavy shadow over the regional financial and investment arena, with stock markets reflecting fluctuations in the security situation through immediate movements in trading activity. Amid the Iranian attacks targeting vital and civilian facilities in Kuwait, Boursa Kuwait has come under close scrutiny to assess the extent of the geopolitical impact on investor confidence and capital flows. Speaking to the daily, financial analyst and economist Sultan Al-Jazzaf, a member of the Kuwait Economic Society, explained that the most significant economic effects of these attacks on stock market trading centred on several areas, most notably pressure on major indices and a decline in liquidity. The waves of missile and drone attacks targeting vital and civilian facilities in Kuwait, including energy installations and areas surrounding Kuwait International Airport, have pushed the market into a state of heightened uncertainty and extreme caution.

This situation has prompted investors to adopt a cautious approach and convert part of their holdings into cash, leading to slight declines and fluctuations in market indices across multiple trading sessions. Daily liquidity levels have fallen to between 60 and 70 million Kuwaiti dinars. The second impact involves redirecting liquidity towards leading stocks with high solvency, such as Kuwait Finance House (KFH) and the banking sector. These stocks have benefited from quarterly earnings announcements and semiannual dividend distributions, providing a degree of support and preventing a sharp, widespread decline. The third impact is the increase in insurance and shipping costs resulting from the military escalation and Tehran’s closure of the Strait of Hormuz. The targeting of oil tankers has led to a significant rise in global oil prices marine insurance costs, and supply chain risks, which have subsequently affected sectors listed on Boursa Kuwait. Some sectors faced selling pressure, including industry and real estate, due to concerns over project slowdowns or rising costs for imported and operational materials.

By Najeh Bilal Al-Seyassah/Arab Times Staff