Alarm as companies pull out of KSE – Still reeling from 2008 crisis, firms seek quick remedies

KUWAIT: The Kuwait Stock Exchange building in downtown city. Continuing withdrawal of companies from KSE has unnerved investors and policy experts alike calling for immediate solutions. — KUNA

KUWAIT: The Kuwait Stock Exchange building in downtown city. Continuing withdrawal of companies from KSE has unnerved investors and policy experts alike calling for immediate solutions. — KUNA

KUWAIT: Recurring withdrawal of companies from Kuwait Stock Exchange (KSE) has become an alarming issue that requires remedies, particularly after six companies with an overall capital amounts to KD 125 million have declared taking such a move, according to analysts.

The 2008 global economic crisis and its ramifications have impacted negatively on these withdrawing companies, they say, forecasting the trend will persist till the yearend, unless prime solutions and stimulants are found to discourage stumbling ones from getting out of the market too.

Maitham Al-Shakhs, the Chief Executive Officer of Al-Arabi Brokerage Company, affirmed that the companies’ pullout from the KSE is alarming, noting that the enlisted once, in 2008, reached 224, as compared to 198 currently.

Most of the companies that declared pullout are small cap companies, however the step remains largely substantial, partially due to other factors such as the Capital Market Authority’s declaration about starting to enforce governance rules, viewed largely as additional burdens on these firms.

These companies have apparently failed in increasing their capitals through subscription and coping with the additional liabilities, warranted for enlisting.

Hamad Al-Hajri, also a financial expert, mentioned some factors that prompted companies to get out, such as this year’s KSE general atmosphere with regard of technical factors and incentives, absence of market makers, liquidity shortage which has been ranging between KD 7 to 10 million. He opined that in case this situation persisted in 2017, other companies would take an identical move. Al-Hajri expressed particular concern at intention of major companies such as Kuwait United Poultry Company (KUPC) to pull out of the bourse. Such a step is quite alarming for other companies of major operating status and a large base of stakeholders may follow suit, he said.

Another company that has expressed such a plan is Kuwait Company for Medical Services with a capitalization of KD 7.6 million. The company, listed in 2009, requested optional withdrawal from the parallel stock market by September 14.

Meanwhile, Kuwait Stock Exchange (KSE) ended yesterday’s trading in the red zone. The price index was down 17.94 points to stand at 5,410.97 points, the weighted index was also down 1.96 points to read 346.41 points, and the KSX 15 index shed 5.69 points reaching 803.27 points. Value of trade was at KD 5,523,525.633 while the volume was 54,667,677 shares done through 1,366 deals. -KUNA

This article was published on 28/08/2016