Overall net profits of Kuwaiti firms listed on the Kuwait Stock exchange plummeted by more than 90 percent last year due to the global economic meltdown, an economic study said yesterday. The 172 firms that announced financial results so far posted total net profit of KD402.3 million ($1.39 billion) in 2008 compared to KD4.38 billion ($15.1 billion) the previous year, Al-Shall Economic Consultants said.
There are 204 companies listed on the Kuwaiti bourse. The fiscal year of eight companies does not end on December 31 while 24 others have failed to announce results and as a result the bourse has suspended them from trading.
Twenty-seven companies saw a rise in their profits last year while the remaining 145 firms either reported a sharp decline in profits or incurred a loss, Al-Shall said. The biggest decline was made by investment firms which chalked up a total loss of $1.4 billion last year, down from an aggregate net profit of $3.9 billion in 2007, the consultancy said.
The losses are likely to increase since most of the companies that did not announce results are also investment firms and are expected to register losses. Kuwaiti investment firms have been hard-hit by the global financial crisis as their assets slumped and new credit became difficult to obtain. A number of leading investment firms have already defaulted on their loans. Kuwaits 99 investment firms have a total debt of $18 billion, of which around $8 billion are owed to foreign banks.
Last month, the oil-rich Gulf state introduced a multi-billion-dollar economic stimulus package to encourage banks to offer new credit and help distressed investment firms. The Kuwait Stock Exchange has dived more than 53 percent since it peaked at 15,654 points in late June. More than $110 billion have been wiped off its market value, which has plunged to around $100 billion.
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