Kuwait implements latest phase of stock exchange revamp

Kuwait’s stock exchange on Sunday will implement the latest set of changes aimed at attracting investors and increasing the number of initial public offerings.

The index will divide its stocks into three sections, based on criteria including their market capitalisation and the volume of shares traded. It will introduce new indexes, including a Premier Market grouping together 16 of Kuwait’s largest and most liquid companies.

Authorities started a series of measures last year to update infrastructure for equities trading with the goal of stirring international interest in the market and jolting into life a large portion of its shares that barely move each day. The benchmark that is in place now has 156 members. On any given day, at least 40 of those have closed unchanged in the past five years.

"We've seen interest from multiple parties to list," said Khaled Al Khaled, chief executive of Boursa Kuwait, in New York. Previously, the exchange's requirements have "pushed people away". With the changes that take effect on Sunday, the exchange will be a more desirable listing destination, he said.

Six months ago, index compiler FTSE Russell classified Kuwait as an emerging market, starting in September. The inclusion is expected to draw $826 million to Kuwaiti stocks, according to estimates by EFG-Hermes. MSCI classifies Kuwait as a frontier market.

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Each of the 16 companies in the so-called Premier Market will have a market capitalisation of at least 144 million Kuwaiti dinars (Dh1.76 billion) and average daily trading of at least 90,000 dinars, according to Boursa Kuwait. An index tracking that segment will gather about 60 per cent of the current overall market capitalisation, and its members will be requested to hold quarterly analyst conferences and make filings in both Arabic and English.

The Premier Market Price Return Index will include National Bank of Kuwait SAKP, Mobile Telecommunications, or Zain, and logistics company Agility Public Warehousing  KSC.

A second market level, known as the Main Market, will cover stocks with average daily trading of 22,500 dinars to 90,000 dinars, and have 148 members. A third layer of stocks with low liquidity, regardless of their market value, will fall under the Auction Market.

“We’re engaging with investors and showing what we’re doing,” Mr Al Khaled said. The restructuring of the market will help “set a proper infrastructure” for exchange traded funds and derivatives, he said.