Kuwait stock market 'will continue to fluctuate'

Kuwait: The Kuwait bourse is headed for a turbulent year as economists strongly believe the exchange will keep fluctuating as part of a "normal correction" until it reaches "healthy levels".

On Wednesday, the last trading day at the Kuwait Stock Exchange (KSE), the index finished at 10,325.9 points. Two weeks earlier, it closed at 10,508.70 points, up on the previous week's 9,896.70 points. The index is still below its 2005 close of 11,445.10 points and down 12.8 per cent on its all-time high of 12,054.70 set on February 7.

"Yes, there was an improvement earlier this month and things seemed flat," said analyst and economic columnist Ali Al Nimesh in a recent interview with Gulf News. He said the improvement, which continued until mid-April, was because of the quarterly dividends, and another fall is expected.

The Kuwaiti bourse, like other Gulf stock markets, dropped earlier this year after a noticeable surge in the past years. However, the impact of the "normal correction process" was less in Kuwait than in other markets, said economists. They also strongly believe the bourse should be left alone to continue its correction until it reaches healthy levels.

Since the beginning of 2001 until early this year, the KSE index has risen from 1,300 point to nearly 12,000, and this is "sufficient for the market to say enough", said Al Nimesh, adding that the decline was inevitable. "It is a correction stemming from the continuous rise during the past five years," Kuwaiti economist Jassem Al Saadoun told Gulf News.

Saadoun, chairman and managing director of Al Shall Consulting and Investment Company, said it is not fair to consider the index's drop of 12.1 per cent from the end of last year to mid-March a catastrophe after its huge gains in the past few years.

Kuwaiti economists also warned of government intervention. In March, the government announced it will support the stock market by increasing the holdings of the Kuwaiti Investment Authority in investment funds.

The decision, which has not yet materialised, was harshly criticised by economists.

"This is a mistake and a sort of political gamble more than being a wise move," said Al Nimesh, adding that the government owns nearly three per cent of the the 40-billion Kuwaiti dinar bourse. Therefore, any intervention would not have any noticeable affect.

"I believe the government has committed a mistake or maybe a sin" by its announcement, said Al Saadoun. "In the past, the government intervened in crises and achieved nothing but a repetition of those crises, increasing the number of affected people," he added.

The Kuwaiti bourse, which lists 161 Kuwaiti and foreign companies, is the second largest in the Gulf after the Saudi exchange.

Kuwaiti stocks finished largely flat yesterday amid lingering tensions between Iran and the West. The index edged down 0.1 per cent to 10,315.80 points. Advancers trailed decliners 43 to 53 as turnover rose to 42.87 million dinars ($146.8 million) from Wednesday's 41.7 million.