Kuwait follows Saudi Arabia in FTSE’s EM listing

Mubasher: Boursa Kuwait has emerged as the new darling of global investors, Bloomberg News said.

Kuwaiti stocks have outperformed most of their Persian Gulf peers since MSCI, the leading provider of investment decision support tools worldwide, said in June that it might announce the upgrade of the nation to emerging-market status next year, joining the ranks of Saudi Arabia, the UAE, and Qatar, the New York-based agency noted.

“Money is already flowing in ahead of Kuwait’s 24 September accession to FTSE Russell’s emerging-market benchmarks as efforts by the country’s market regulator to boost liquidity and attract international interest pay off,” it added.

Investors and Kuwaiti policymakers have long neglected Kuwait capital markets, which are overtaken by the UAE in terms of economic freedom and comes in the shadow of Saudi Arabia’s now-accessible equity market, Marshall Stocker, a Boston-based portfolio manager at Eaton Vance Corp., told Bloomberg.

In 2017-end, Kuwait ranked the 96th in the World Bank’s index for the ease of doing business.

The UAE, which earned emerging-market status at MSCI in 2013, came in the 21st place amongst the World Bank list, while Saudi Arabia was at 92, Bloomberg noted.

In 2017, authorities in Kuwait started a series of measures in an effort to promote infrastructure for equities trading, as their goal was to stir global interest in one of the region’s oldest stock markets.

In April 2018, Boursa Kuwait segregated stocks based on criteria such as market value, and unveiled new indexes, including a premier market comprised of Kuwait’s largest and most liquid companies.

“Still, its $85 billion market value amounts to less than one-fifth of Saudi Arabia’s and is 65 percent lower than Dubai and Abu Dhabi combined,” Bloomberg said.

The key Kuwaiti stock index spiked 10% since MSCI’s June announcement, while the benchmark for Saudi Arabia, whose upgrade to emerging-market status MSCI was announced that day, declined about 6% in the period.

The Saudi Stock Exchange (Tadawul) was among the three best performers worldwide in the first half of 2018, measured in US dollars.

Investors from outside the GCC region have been able to trade stocks on Boursa Kuwait for more than a decade, while those shareholders gained direct-trading access to Saudi equities in mid-2015.

“Given that only FTSE has announced Kuwait’s inclusion into its emerging-market index so far, there is potential for a strong rally if MSCI confirms Kuwait’s inclusion into its EM index,” the head of research at Kuwait Financial Centre M.R. Raghu said.

Mubasher Contribution Time: 09-Sep-2018 14:27 (GMT)
Mubasher Last Update Time: 09-Sep-2018 14:27 (GMT)