Interview: Khaled Abdulrazzaq Al Khaled
How is Boursa Kuwait safeguarding the stability of the local exchange against disruptive global trends?
KHALED ABDULRAZZAQ AL KHALED: Boursa Kuwait is very aware of many of the disruptive effects of the global market since it has much in common with other markets. The Capital Markets Authority (CMA) created Boursa Kuwait to manage and operate the exchange in line with international standards and best practices by adopting new techniques and approaches, introducing regulatory reforms and offering new products. This new approach will ensure that Boursa Kuwait is as robust and secure as possible. The aim of this is to attract new investors into the Kuwaiti market, particularly foreign institutional investors who left the market following the turmoil of 2008-09. Kuwait has a history as an important regional trading centre and we see Boursa Kuwait as being central to the country consolidating this position in the future.
Can regulatory burdens become so great that it becomes difficult for financial systems to function effectively and efficiently?
AL KHALED: In the wake of the global economic crisis of 2008, the government formed the CMA as a modern, leading regulatory authority that works on developing and supervising the activities of capital markets in Kuwait, and on creating an attractive investment environment that secures investors’ trust on both regional and international levels. I can see that sometimes the regulation processes could slow the pace of rolling out our plans, but I do not believe it will affect them negatively, provided the regulations are considered and communicated effectively. The CMA and Boursa Kuwait work very closely to ensure that the rules and operations of the market reflect international best practice, as well as the needs of its current and potential customers, and that these are made as transparent and practical as possible. As part of this, Boursa Kuwait has been working towards compiling a best-in-class rulebook that will be the first ever produced in Kuwait.
What are some of the non-traditional risks threatening the GCC capital markets?
AL KHALED: The lack of political stability in parts of the region and the volatility of the global economy continue to threaten the confidence of markets to forecast accurately, and encourages markets to think in the short-term rather than the longer term. This has been a concerning and growing trend not only in our region, but beyond. I think this reflects the challenge of trying to assess these hard-to-measure risks.
Looking back over 2016, world events have been unpredictable: the UK’s Brexit referendum and the choice by the American people of their next president were generally unexpected results. The outcomes will have a fundamental impact on world markets, including those in the GCC. I would say that the understanding of these risks have not changed a great deal, but the market response has been to become more cautious. Participants need to be more flexible, as well as more focused on the short term, in their planning.
Which sectors can investors look to in the next 12-24 months for long-term sustainable growth?
AL KHALED: I think it would be sensible to look at areas targeted for future development and consider which sectors can benefit. Here in Kuwait, the government’s programme of infrastructure development as part of Kuwait’s Vision 2035 continues, and there are major plans to develop and modernise the country over the coming years. Building on this theme, we expect there to be opportunities in financial markets for private sector initiatives to help finance these developments, as well as opportunities in the real estate sector and in the areas of engineering and construction. Additionally, it is known that the price of oil has been under pressure and this has affected many Gulf economies. However, the industry continues to develop and technology around it continues to advance. In my opinion, the demand for energy is not going to diminish anytime soon.
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