x Abu Dhabi, UAEThursday 27 July 2017

Kuwaiti bourse to lure foreign investment

What's up Regulation. After many delays, the Kuwait Stock Exchange is about to become the last bourse in the six GCC countries to create an independent market regulator.

DUBAI // After many delays, the Kuwait Stock Exchange is about to become the last bourse in the six GCC countries to create an independent market regulator. The move is designed to enforce transparency on listed firms, which in turn should encourage more foreign investment. The bourse is the second-largest among GCC countries, behind Saudi Arabia.

"Any regulatory effort which imposes stringent requirements in transparency and disclosure rules is a welcome addition for foreign investors," said Hassan Awan, the head of buy-side equities research at The National Investor, a brokerage firm based in Abu Dhabi. "They avoid being in loosely regulated regimes." The Kuwaiti parliament passed the bill in a unanimous vote last week. But some analysts were disappointed that the bill did not specify an action plan or a timetable to have the regulator up and running.

"This is adding to negative sentiment among investors who believe a regulator would not make much difference," said Wadah al Taha, a market analyst in Dubai. The bourse is run by a committee of government officials and executives from the exchange, but a number of listed companies have been criticised by investors in recent years for not being fully transparent or not adhering to disclosure rules.

Shailesh Dash, a director at Al Masah Capital in Kuwait, said the lack of an effective regulator had caused foreign investors to steer clear of the exchange. Foreign ownership has not exceeded 10 per cent. "Such little interest in the second-largest bourse [in the region] is a pity," Mr Dash said. The proposed new authority will have powers to impose fines and prison sentences. It will also oversee initial public offerings, mergers and acquisitions, and will have the ability to halt trade when it suspects stock manipulation.

The bill needs to be approved by the cabinet, and later the emir. Only then will the government determine the precise scope of the new agency. Mr Awan said he expected the regulator to be operating by the end of the year. @Email:skhan@thenational.ae