How is Boursa Kuwait encouraging more listings?
AL KHALED: Before Boursa Kuwait was privatised, the listing rules were rather complicated, which undoubtedly influenced whether companies went public. However, the progress in the first three quarters of 2018 has been exceptional. In September 2018 Boursa Kuwait was included in the emerging markets list of the FTSE Russell Emerging Markets Index, which is set to trigger significant growth in liquidity. We also launched a new rulebook outlining updated regulations and guidelines in an easy-to-comprehend manner.
The rulebook specifies a new three-tiered market segmentation, consisting of the premier market, the main market and the auction market. The new structure aims to remedy two major problems facing the current market, which are the lack of transparency and the suboptimal issuers base. It will create an attractive investment platform that will help increase the percentage of shares traded in the market in the long run. We are confident that this is another step in the right direction to put Kuwait on the international markets map and on the radars of foreign investors.
In addition to the segmentation, a new set of indices was also announced. This represents the phase in our development plan aimed at overhauling and reforming the stock exchange and elevating it to international standards. While 2018 was a transitory year, we forecast the changes will incentivise many companies to consider listing in the near future.
Lastly, we launched a new, free-of-charge digital education portal called Boursa Academy Kuwait Online, which is aimed to promote financial literacy among new and professional retail investors.
How does Boursa Kuwait plan to further attract foreign investor participation?
AL KHALED: The infrastructural upgrades we have developed since 2016 set a solid foundation for expanding the offerings of Boursa Kuwait. Furthermore, we plan to introduce short selling, margin trading, exchange-traded funds and derivatives. Beyond investment products, a strong network of reliable service providers and participants is crucial, as is corporate governance. In 2018 we conducted roadshows in New York, London and Dubai, all of which were met with keen interest by some of the most reputable institutional investors, indicating an increased awareness of the investment opportunities in Kuwait’s stock market.
To what extent are businesses in Kuwait making use of the sovereign and corporate debt markets?
AL KHALED: Despite considerable progress over the past years, GCC corporate and sovereign debt markets are still in the early stages of development, and Kuwait is no exception. However, in line with the momentum gained by global debt markets, the GCC’s debt markets also surged in 2017. While sovereign debtors account for the lion’s share of the market, corporates are a close second. Boursa Kuwait has been paving the way for local businesses to explore the advantages of corporate bonds, in addition to further strengthening their understanding of the benefits of equity financing.
What are your expectations for Boursa Kuwait?
AL KHALED: We were thrilled to attain the emerging markets status from FTSE Russell, after having worked hard to meet all the requirements. Instrumental to this achievement were the infrastructural changes implemented in areas such as the settlement cycle, trading efficiency, transparency and disclosures, as well as the additional services offered, including extended auctions, block trades and market makers.
While we do not provide quantitative forecasts for active and passive inflows, it is evident that there is strong and growing interest in the Kuwaiti market from foreign investors. After obtaining full membership in the World Federation of Exchanges, we are set on a path towards further integration with global markets.
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