Foreigners’ Holdings in Boursa Kuwait

We do not have recent figures for foreign holdings in all listed companies on Boursa Kuwait. Therefore, it is okay to adopt a key index for this trading to be published weekly for foreign holdings in Kuwaiti banks issued by Boursa Kuwait and the Central Bank of Kuwait as the source at the end of every working week. We believe that the banking sector is the most important in attracting Foreign Indirect Investment. We also believe that the analysis of its trading is sufficient to know the behavior of this trading, but caution is required against unpleasant surprises.

The data published about indirect foreign investment behavior in the emerging world exchanges in last August indicated a $14 billion liquefaction movement which then was the outcome of a major correction in the world’s major stock exchanges. The decision to liquefy these investments may come without analysis as foreign portfolios there are automatically liquefied if prices reach a pre-fixed low level where sale begins to cease losses at that level.

Following up figures from Wednesday July 3rd 2019 and Wednesday September 18th 2019, it appears that liquefaction did not reach foreigners’ holdings in the listed banks of Boursa Kuwait.

At the beginning of that period, i.e. on July 3rd 2019, market capitalization of foreigners’ contributions in Kuwaiti banks at the closing prices of that day totaled to KD 1.402 billion. The percentage of that holdings in the banking sector was at 7.78%. Its maximum in absolute market capitalization was at KD 1.489 billion on August 14th 2019, most of which was due to the positive performance of the Boursa Kuwait. Foreigners’ holdings contribution to the entire sector rose slightly to about 8%. On September 18th 2019, the absolute value of the foreigners’ contribution decreased noticeably to about KD 1.311 billion, with nearly 11.9% loss of its value; however, their relative contribution increased slightly to 8.07%, which means that they retained most of their investment at Boursa Kuwait despite the decreasing prices as in the attached graph.

This may mean that their risk assessment on the listed banks in Boursa Kuwait was less than their risk assessment in other emerging stock markets. This was not the local investor’s behavior perhaps due to the fact that the price of Kuwaiti banks against their performance still leaves a comfortable margin. We would like to repeat what we have mentioned earlier that the trading movement according traders to nationality is important information to rationalize the investor’s decision in the Boursa Kuwait. It should include the trading of all listed companies and not only the local banks. It is supposed to be published after the closing of trading each business day, which is an easy matter.