The Kuwait Stock Exchange (KSE) gave a guarded welcome yesterday to a bill allowing foreigners to own and trade in shares as analysts said it would take months for it to have a real impact on the sluggish bourse.
The KSE index gained 8.4 points yesterday, or 0.6 percent, but trading boomed to levels not seen in three months after the cabinet's approval Sunday of regulations that will allow foreigners to own stocks.
More than 39 million shares worth $43 million exchanged hands, double the daily average in the previous two days and nine times more than the daily average over the past several weeks.
The bill allows foreign investors and expatriates living in Kuwait to own up to 100 percent of the stock of Kuwaiti companies listed on the stock exchange other than banks, where ownership will be limited to 49 percent.
Wafa al-Rashid, head of public relations for the bourse, said foreign ownership will begin once the new regulations are published in the official gazette, probably on August 27.
Rashid said her office had fielded hundreds of calls from foreigners inquiring about the new measure, and one broker said that he had already received orders from three expatriates living in Kuwait to buy stocks.
"I kept them ready to execute the orders when the regulations are enforced," Abdullah Sorkhoh of al-Attihad Brokerage said.
But the head of local investments at one local firm said the real impact will not be felt for several months to come.
"It's a welcome measure. But we shouldn't expect foreign investors to be knocking on our doors. It will take several months to see the fruits of this ruling," said Fawaz al-Ahmad of the Kuwait and Middle East Investment Co.
"To be more effective, the bill should be accompanied with a revision to the taxation system," Ahmad added.
Economic expert Hajjaj Boukhdour believes the bill on its own will not be able to stimulate the market because of the country's structural economic defects.
"In Kuwait, we have a problem with the top management in our companies, mainly because they are family-orientated. Secondly, trading has been heavily dependent on speculations," he said.
Some 87 companies with market capitalization of about $20 billion are listed on the KSE, the second largest bourse in the Arab world after the NCFEI in Saudi Arabia.
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
