Kuwaiti stocks have been leading the Gulf region this year, driven by a surge in banking shares. This positive performance comes amid growing optimism that the country’s long-awaited economic reforms are finally starting to yield results according to Bloomberg.
The Kuwait Stock Exchange’s premier market index has surged 11% since the start of the year, outpacing the Dubai Financial Market’s gains by more than four times and doubling the performance of the MSCI Emerging Markets Index.
Demand for Kuwaiti stocks is rising, fueled by optimism surrounding the government’s efforts to eliminate barriers to public spending and pave the way for legislation that would allow the issuance of the first Kuwaiti sovereign bonds since 2017.
Anticipated reforms, particularly in real estate finance, have driven a surge in bank stocks. Boubyan Bank, Burgan Bank, and Warba Bank have all seen increases of at least 18% since the beginning of the year.
The mortgage law is expected to drive the growth of retail portfolios at Kuwaiti banks said Jaap Meijer, head of research at Dubai-based Arqaam Capital.
Additionally, Kuwaiti stocks are currently valued lower than their Gulf counterparts. The Kuwaiti benchmark index is trading at 14.1 times forward earnings, below its five-year average of 15.7 times.
Furthermore, there is a potential for Kuwait to be upgraded from secondary emerging market to advanced emerging market status in the upcoming FTSE Russell review in September. While this upgrade may not result in significant passive investment flows, it is expected to enhance investor confidence.
Presently, optimism continues to dominate the market, drawing in investors and increasing the likelihood of new companies being listed.
The Director of Investment Strategy and Research at Kamco Invest, Junaid Ansari stated that the current market conditions are ideal for IPOs, so it wouldn’t be surprising if we see new offerings this year. These offerings are contributing to the overall market performance.
Source: Al Rai
