Listed Companies’ Liquidity (January – September 2019)

The severe deviation in the boursa liquidity and its twelve sectors will naturally apply to its companies. The most liquid companies (five) captured 57.73% of total boursa Kuwait liquidity since the beginning of this year until the end of September.  11 companies, next to them in nine months of this year, accounted for 16.2% of total liquidity of the boursa. NBK shared it with about 13.94% of liquidity. The two combined accounted for about 30.13% of liquidity in the boursa. Al Ahli United Bank (Bahrain) accounted for 10.79% of liquidity and the Gulf Bank accounted for 10.11% of total liquidity.

On the contrary, there are 5 listed companies with the least liquidity and got only KD 1,000 of liquidity: three of which are without trading at all, one is with KD 15 trading and the last one is KD 795.  Eleven companies with the least liquidity following them got KD 1,058 liquidity for the least one and KD 23,082 liquidity for the highest one. The total liquidity for the eleven companies scored KD 121.8 thousand. There are other 54 listed companies whose absolute liquidity ranged between KD 28.3 thousand for the lowest and less than one million dinars or about KD 964,000 for the highest. Their combined share of liquidity was KD 22.8 million, or about 0.39% of total boursa liquidity, i.e. 31% of the total number of listed companies.We assume that a company’s liquidity, its trading value, is the most important purpose for its listing. Certainly, these companies include good ones and for reasons including the monopoly of ownership and its unawareness of its status, its liquidity recedes. They also include a large number of them whose listing is unwarranted with their continued liquidity scarcity and so as not to affect the confidence in the rest of the companies, and consequently in the boursa trading. They must be encouraged to cancel their listing.  

By reviewing the good liquidity of the local boursa compared to the region’s stock markets, that good liquidity has deviated at the boursa level and consequently at the level of its sectors and its companies, we believe it is time to have a thorough diagnosis and designing policies that preserve confidence in the local boursa.