x Abu Dhabi, UAESunday 21 January 2018

Kuwait may suspend shares

The country's stock exchange issues threats over missing yearly results.

The Kuwait Stock Exchange has threatened to suspend the shares of 23 companies that have not reported financial results for last year. The exchange set a deadline of 8.30am today for submission of results. Companies that do not comply will be suspended from trading, a reminder on the exchange's website read yesterday.

A total of 28 companies, comprising about 12 per cent of all listed companies in Kuwait, had failed to submit financial results, the statement said yesterday morning. Five of those are already suspended over missing financial information. Public companies in Kuwait are notorious for failing to meet profit-reporting deadlines, especially during times of economic distress. The Kuwait Stock Exchange is the only bourse in the Gulf that lacks an independent regulator to enforce punctual financial reporting, leaving the exchange to oversee itself.

The country's parliament passed a law this year to create a Capital Markets Authority that would police the exchange but the body has yet to be formed. "Late reporting is happening with a lot of regularity," said an analyst in Kuwait who asked to remain anonymous. "Companies are skipping the deadline, then getting suspended and later reinstated. This is a quarter where you cannot hide things any more."

According to a list posted on the exchange's website yesterday morning, most of the companies that had yet to report were in the investment and property sectors. Agility, a logistics company in Kuwait that is embroiled in a US court dispute, where it stands accused of overcharging on US$8.5 billion (Dh31.22bn) worth of military contracts, was on the list. The Middle East's largest logistics company said in a statement yesterday it would delay the announcement of its financial results until Tuesday, pending a possible resolution of negotiations with the US government.

The Investment Dar, a company that owns half of the British luxury car maker Aston Martin and is undergoing a $3.5bn debt restructuring, was also on the list. Its shares have been suspended for months, and it has not submitted financial results since the third quarter of 2008 amid an accounting dispute with the central bank. The analyst in Kuwait said results were being delayed in part because of stricter supervision by the regulator. The central bank, which must approve results before their release, has been paying close attention to how companies value illiquid assets.

Many Kuwaiti investment firms have these hard-to-value assets on their books, which has left the central bank with a backlog of results to evaluate. "It's not only the companies' fault," the analyst said. Global Investment House, a Kuwaiti company that reached an agreement with creditors last year to restructure $1.7bn of debt, also had its shares suspended yesterday until arbitration claims worth $50.2 million with two local companies are resolved.