Rising investors confidence led the Kuwait Stock Exchange three percent higher on Wednesday, June 13, reaching a 28-month high, reported AFP news agency. The KSE index closed at 1,648.1 points, representing a 22 percent rise since the beginning of the year, though still 41.9 percent lower than its all-time high of November 1997.
Trading volume for the week reached a daily average of $76.25 million—almost four times higher than January's average of less than $20 million.
Analysts fear traders may be demonstrating over confidence with a rising number of speculative positions, leading share prices to exaggerated highs. Kuwait's leading economist and head of Al-Shall Economic Consultants, Jassem al-Saadun, warns that “there should be no exaggeration in confidence because our (bourse) history is full of painful incidents." In 1997 an overly large number of speculative positions lead the Kuwaiti bourse to loser 50 percent of its value.
Brokers do not believe a crash of that magnitude will happen in the near future, as the market today is considerably more stable, supported by government decisions to implement long-promised economic reforms. Such reforms include a draft bill approved by the Kuwaiti cabinet earlier this week, allowing Gulf banks to operate in the emirate. Kuwait has also introduced direct and indirect foreign investment bills and has lowered taxes on foreign firms.
The Kuwait Stock Exchange is comprised of 87 companies and has a capitalization of over $23 billion. It is the second largest bourse in the Arab world following Saudi Arabia. — (MENA Report)
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