Kuwait: Marketing the markets

The Kuwait Stock Exchange (KSE) is in the midst of what has been described as the largest overhaul of its trading system in almost 20 years, and measures to privatise the bourse, streamline procedures and strengthen transparency all aim to raise the market’s profile and appeal as an investment destination.

The widely anticipated developments are expected to reinvigorate the bourse, which has underperformed since the financial crisis of 2008. The Kuwaiti market reacted like most others, falling as the world’s financial underpinnings unravelled amid uncertainty and the prospect of losses. Critics have also pointed to a lack of transparency keeping investors away.

The market is working to overcome these challenges, however. On May 13, the KSE launched X-Steam, its new NASDAQ OMX-powered trading platform. The adoption of the advanced trading and surveillance technology was seen as a crucial step toward facilitating new exchange-traded products and services, as well as bringing the KSE in line with international standards and industry best practices.

X-Steam has been described as a multi-asset system capable of handling equities, commodities, debt, exchange-traded funds, futures, options, swaps and derivatives on a single platform. Each of the 220 firms currently listed on the KSE have been categorised and divided into 15 new sectors on the boards, and the 15 largest listings, including eight of the country’s nine commercial banks, are grouped together in a separate index. The Kuwait-15, as it is known, is the benchmark index on the KSE, with the blue chip listings estimated to have a combined value of almost $70bn, around two-thirds of the market’s total worth.

According to Issam Alusaimi, the head of the KSE’s projects management office, the new platform will help develop the country’s capital market, as well as reach its objective of transforming Kuwait into a leading regional financial centre.

“We look forward to building on this base to bring further positive and major developments in our marketplace for the benefit of investors, listed companies, market participants and the Kuwaiti economy as a whole,” Alusaimi said at the launch of X-Stream.

One of the major components of X-Stream is a complex surveillance system that collects and analyses real-time data, monitoring for any signs of illegal or questionable practices in trades. This measure, which includes faster and more accurate trades, along with tighter controls, should go a long way to reassure investors about the transparency of the KSE, which has in the past been a cause of concern.

Another sign that the KSE is determined to bolster its image for transparency and efficiency came in mid-May, when the exchange suspended trading on 31 firms that had not met the deadline for tabling their financial statements for the first quarter of the year. The move has been seen by many as a clear indication that authorities are serious about ensuring investors are provided with all necessary information for trading purposes and reinforces the need for listed companies to meet all the requirements of the upgraded exchange’s operational regime.

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