The Capital Markets Authority has launched a questionnaire on the establishment of a specialized platform for listing and trading the shares of small and medium-sized growth companies, as part of its endeavor to regulate the trading of the shares of these companies through new channels provided by the capital market system.
While frequent data shows that about 90% of the total licensed companies locally are medium and small enterprises by Kuwaiti entrepreneurs, and that the number of these companies exceeds 25,000, attracting 1% of the total of these companies means trading the shares of 250 new companies on the proposed platform which is equivalent to 156.25 percent of the 160 companies currently listed on the Kuwait Stock Exchange, which raises the question about whether the project will provide alternatives to the investment community that pumps its money into the stock market? Or that the idea may be faced with some lack of interaction so that the project returns to the inclusion again, reports a local Arabic daily.
For its part, the KMA called on all specialists and interested parties to express their opinions and perceptions regarding the creation of the platform and what it might add to small and medium-sized companies and the market in general, and to discuss the proposed incentives for including these companies when creating the platform.
Al-Rai had discussed on October 10, 2021 under the title ‘The Markets Authority’ is studying regulating the trading of small and medium-sized companies through “auctions”), the direction of the “Markets Authority”, explaining the details of the project. It is up to the general public to express their opinions on the expected form of the mechanisms for regulating the trading of these companies.
The questionnaire dealt with a number of points, most notably regarding determining the number of employees in the targeted companies, where the options offered ranged between 1 and 50 employees, in addition to the importance of clarifying whether the company is a family company or entrepreneurs or whether it is an ‘Investor’ or a venture capital company and identifying the type of challenges faced by small and medium-sized companies. In the context of the questionnaire, the authority listed 6 challenges to choose among them: “production cost, access to finance, scarcity of skilled labor, competition in the market, access to the consumer (marketing problems) and labor cost.”
The questionnaire reviewed the appropriate types of financing, whether through internal or external loans by investors, or bank loans and others, while the idea of establishing a specialized stock exchange to list and trade the shares of small and medium-sized companies would benefit the small and medium-sized companies sector in Kuwait. The idea is appropriate or not according to the opinion of the respondents in the survey.
The questionnaire included other important points about whether the company wishes to list in other capital markets in the future, and what those markets are, in addition to monitoring the desires of listing locally, mainly before launching the rules regulating this in its final form.
In its questionnaire, the Markets Authority also raised a question about the challenges that the company might face in the event of its desire to list, as it addressed the options in this aspect: And the high cost of the listing process, and finally the delivery of financial and supervisory reports.”
In a statement, the authority confirmed that “in recognition of the important role that small and medium growth companies contribute to the economies of countries, many securities authorities have taken to adopting initiatives that would support this sector and promote prosperity and growth for the participating parties, and these initiatives included providing financing solutions by creating a platform dedicated to small and medium-sized growth companies with the development of flexible and easier listing requirements to match the nature of companies in this sector and their stage of growth,” referring to her study of creating an attractive capital market to finance such companies in a way that enhances the growth of the business sector in accordance with international best practices, thus being considered an additional option in support of these companies, and at the same time an innovative investment option available to investors according to appropriate standards of transparency.
The Markets Authority pointed out that it has coordinated with the Kuwait Stock Exchange Company to discuss its vision of working towards the completion of this project and planning for the next steps, in light of the results of the surveys carried out by the concerned teams on an ongoing basis.
SMEs in Kuwait contribute to about 3 percent of the gross domestic product, according to a previous report by the Kuwait Financial Center Company.
The total value added by small and medium enterprises amounted to 1.216 million dinars (2019), while the share of the contribution of small and medium enterprises to the GDP in emerging economies is about 40 percent, and 50 percent in high-income economies, while it is 53 percent in the UAE.