Gulf and Arab funds managed by local investment companies have consistently outperformed funds directed towards investing in the Kuwait Stock Exchange. This revelation has raised questions about why the Kuwait Stock Exchange is not keeping pace with the trends observed in the rest of the Gulf and Arab markets, as reported by Al-Jarida Daily.
Despite boasting a robust banking sector and being home to regional and global companies, the Kuwait Stock Exchange has struggled to match the lucrative returns achieved by Gulf and Arab funds. Traditional and Islamic funds managed by Kuwaiti companies have reported significant returns, ranging from 12.29% for the Al Ahli Gulf Fund to 3.8% for the Noor Islamic Gulf Fund.
On the other hand, local Kuwaiti funds have experienced losses, with the highest-loss funds ranging between 2.3% and 10.3%. This recurring scenario highlights the urgent need to address the challenges facing the Kuwait Stock Exchange. If left unattended, more liquidity will flow to the Gulf and Arab markets, further exacerbating the discrepancy in returns and hindering local investors’ opportunities to achieve profitable returns and obtain distributions. The market urgently requires a comprehensive development and modernization workshop that goes beyond mere slogans and titles.
Since its privatization, the Kuwait Stock Exchange has remained stagnant, failing to reflect the private sector’s imprint. Additionally, the market has witnessed an exodus of companies from the listing booth, impeding growth and experiencing a dearth in financial instruments. Despite approvals from supervisory authorities, many approved instruments remain ink on paper, lacking execution.
As we enter 2024, the Kuwait Stock Exchange has yet to witness any new instrument deals, limiting transactions to direct cash buying and selling. To ensure the market’s performance improves, there is a pressing need to diversify tools and market the stock market in a more professional manner. Addressing the problems and shortcomings plaguing the market is crucial, while reducing the pressure on brokerage companies burdened with high commissions and subscriptions is also imperative.
To contextualize these challenges to an international audience, it is important to understand the local laws and customs that may contribute to the Kuwait Stock Exchange’s struggles. Kuwait has a unique economic landscape, heavily reliant on oil exports, and the stock market is not immune to the fluctuations in the oil market. Additionally, the Kuwaiti market operates within a regulatory framework that may differ from other Gulf and Arab markets, which could impact its performance.
While the Kuwait Stock Exchange has faced its fair share of obstacles, it is not without hope. Implementing measures to attract more companies to list and ensuring the execution of approved financial instruments are crucial steps in revitalizing the market. Furthermore, diversifying the available tools for investors and improving the market’s professional image will contribute to its long-term success.
It is imperative for the Kuwaiti authorities and market participants to collaborate on a comprehensive plan that addresses the challenges faced by the Kuwait Stock Exchange. This plan should include measures to enhance transparency, streamline regulations, and provide incentives for companies to list. Additionally, efforts should be made to educate and empower local investors, enabling them to make informed decisions and participate actively in the market.
In conclusion, the underperformance of the Kuwait Stock Exchange compared to Gulf and Arab funds highlights the need for urgent action. By addressing the challenges faced by the market, implementing reforms, and attracting more companies and investors, the Kuwait Stock Exchange can regain its competitive edge and provide lucrative opportunities for local and international investors alike.
Source: TimesKuwait
