Foreigners’ Holdings in the Kuwaiti Banking Sector

It is good to have Foreign investment in the stock market as we have frequently stated but these investments remain hot money, i.e. the decision to withdraw them takes place in a short time, and most often the decision is made at an inappropriate time for the country where the money is invested. Therefore, their follow-up and reading their approach are useful. From the recent experience of foreign investment in the banking sector at Boursa Kuwait since July 3, 2019, we conclude that until November 27th 2019 -nearly five months- it was stable investment and its dose has increased and has not been adversely affected until now by the turbulence of the global economy and stock exchanges, not even by the rise and fall periods at Boursa Kuwait.

The foreigners’ share in the banking sector on July 3, 2019 was about 7.78%. And by November 27th 2019, it amounted to about 8.89%. It also increased its absolute value from about KD 1.402 billion to about KD 1.571 billion. The rise is bigger in absolute value because the market capital value of the banking sector decreased between July 3 and November 27th 2019 by   about   -2%.   This   means  that  some absolute value was lost due to the sector’s loss.

The relative rise in foreign holdings in the banking sector coincides with moving old investment. Investors allocate funds for Boursa Kuwait but they are active in transferring investment from one bank to another. In the period from the end of last August to the end of last September foreign holdings rose in six banks and dropped in three banks and did not change in one bank. The biggest decline affected a small contribution to one of the banks and scored -15.2% and the highest increase scored 47.8% in a medium contribution to another bank. This was reversed in late October versus late September when foreigners’ contribution decreased in 6 banks and the rise affected 4 banks. The same scenario was also repeated during November until the November 27th 2019 compared with last October. The decline affected the contribution in 5 banks and the rise affected 4 banks and one bank did not change. Our estimated is that the foreign investment which has increased slightly recently remained active in moving its investments. We believe that the justifications for the movement are two: the first is according to their evaluation of the evolution of the performance of this bank or that and the second is if the investment objective to achieve a return from rising prices or the necessity to stop its losses if they fall. We still believe in the necessity for the early reading of the movement and the approach of such investments. This will not be achieved except by publishing their information in all Boursa Kuwait companies on a daily basis. We do not see any impediment that prevents this daily publication.