Stock delisting hurts Kuwait bourse status

Kuwait 

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A rising tide of delistings from Kuwait’s stock market threatens to widen a gap with rival bourses in the region as companies favour more dynamic economies such as Saudi Arabia and Dubai to sell shares. 

With a capitalisation of about $88 billion, close to Dubai Financial Market (DFM) at $97bn, Kuwait has long been one of the Arab world’s major markets. But that status could eventually be threatened by an exodus of companies. Since the start of 2014, when Kuwait had 211 listed firms, 24 have announced plans to delist.

In the same period, the exchange decided to delist a further five firms because their shares had been suspended for too long or their accumulated losses exceeded 75 per cent of capital. Only two new firms listed: Telecommunications operator VIVA Kuwait and Mezzan Holding. 

That contrasts with several other Arab markets where listings have been growing, including Saudi Arabia, up by nine to 171 since the beginning of 2014, and Dubai, where combined listings on the DFM and NASDAQ Dubai are up seven to 70.

There are several motives for delisting from Kuwait. One is weak stock prices as its economy underperforms more dynamic economies in the Gulf. Kuwait’s stock index is down 24pc since the start of 2014, against a 12pc drop for Saudi Arabia and an 8pc rise for Dubai. 

Companies also complain of the costs of maintaining a listing, and sluggish trading; daily volumes of shares traded in Kuwait are often under half levels in Saudi Arabia and Dubai. 

Authorities know there is a problem. Capital Markets Authority chairman Nayef Al Hajraf told the Al Jarida newspaper that state-owned oil companies might be listed in order to deepen Kuwait’s market. 

There are also hopes of bringing in outside expertise.