Rising international and local interest rates have impacted the cost of financing for companies listed on the Kuwait Stock Exchange, excluding banks, according to a report by Al-Anbaa. Analysts used data available until the end of June 2023 for debts and financing of listed companies, finding that total debts amounted to approximately KWD 13.91bn ($46.1bn), while assets reached KWD 47.43bn ($157.2bn).
The average debt-to-assets ratio for listed companies reached 29.3%, while the financial leverage ratio stood at 99%. The financial services sector had the highest debt-to-shareholders’ equity ratio at 163%. Meanwhile, the Kuwait Stock Exchange started the week with notable increases, with all indicators and variables up. Market value rose 1.2% to KWD 39.1bn ($129.5bn), while all market indices saw significant rises. The session witnessed an increase in purchasing momentum on leading stocks whose prices recently declined, with the concentration of liquidity in leading stocks continuing, led by “KFH,” “National Bank”, “IFA Hotels,” “Industries,” and “Ships.” The liquidity flowing to the market increased by 13% to KWD 44.8m ($148.6m).
Kuwaiti listed companies are facing rising financing burdens due to the increase in international and local interest rates. A recent study by Al-Anbaa found that the balance sheets of listed companies, excluding banks, depend on borrowing and, therefore, partners face higher debt repayments from the higher finance services.
The study used data until the end of June 2023 for debts and financing of listed companies. Analysts found that total debts amounted to approximately KWD 13.91 billion ($46.1bn) while assets reached KWD 47.43 billion ($157.2bn). The average debt-to-assets ratio for listed companies reached 29.3%, while the financial leverage ratio stood at 99%. The financial services sector was the hardest hit, with the highest debt-to-shareholders’ equity ratio at 163%. While the assets of companies in the sector amounted to KWD 20.81 billion ($69.1bn), the debt of the companies in the sector amounted to around KWD 6 billion ($19.9bn).
The shareholders’ equity of companies in the financial services sector amounted to KWD 3.67 billion ($12.2bn), equivalent to 17.6% of the sector’s assets. However, the sector leads Kuwait Projects Holding Company (KIPCO), which has assets worth KWD 11.9 billion ($39.5bn), equivalent to 57% of the sector’s total assets, but the debts stood at KWD 2.39 billion ($7.9bn), 40% of the sector’s debts. The industrial sector’s assets amounted to around KWD 7.35 billion ($24.4bn), while its companies’ debts clocked in at approximately KWD 2.32 billion ($7.7bn).
Shareholders’ equity recorded KWD 3.47 billion ($11.5bn), equivalent to a 57% debt-to-shareholders’ equity ratio. Agility, led the industrial sector in terms of assets, which amounted to KWD 3.73 billion ($12.4bn), equivalent to 51% of the sector’s assets. The Kuwait Stock Exchange, on the other hand, started the week with notable increases across all indicators and variables. Market value rose by 1.2% to KWD 39.1bn ($129.5bn), while all market indices saw significant rises. The primary market index increased 1.3%, reaching 7,269 points.
The main market index rose 0.6%, reaching 5,354 points, and the general market index increased 1.2%, adding 79.1 points to reach 6,612. The liquidity flowing to the market increased by 13%, adding up to KWD 44.8 million ($148.6m). The concentration of liquidity in the leading stocks continued, led by “KFH,” “National Bank,” “IFA Hotels,” “Industries,” and “Ships.” Trading volumes also increased by 32% in yesterday’s session, rising to 178 million shares.
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