Public Subscription in the “North Al-Zour Al-Oula” and “Boursa Kuwait” companies

Citizens’ subscription in the shares of “North Al-Zour Al-Oula” and “Boursa Kuwait” companies’ ended on 01/12/2019. Coverage percentage of “North Al-Zour Al-Oula” Company scored 127% of 550 million offered shares, which is 27% higher than required. While the coverage rate of Boursa Kuwait’s subscription exceeded 850%, or about 8.5 times the offered amount of 100 million shares.

The vast difference between the two companies ’subscription coverage is mostly due to financial justifications. The  low  coverage rate of the “North Al-Zour Al-Oula” Company is mostly due to the expectations of its financial performance. The first justification is the comparison with similar projects in the region most of which were unsuccessful in their financial performance. The second justification is that the client of the company is one and governmental and risks of relying on only one customer in light of the overall economic and political variables are high. The third justification is that it is a new company that has no activity on the ground   or   even reliable performance 

expectations. This means that it is an investment that needs time in order to bear fruit in an environment dominated by a preference for short-term investment. Finally, the size of the project and the required financial coverage is more than 5.5 times the size required for the “Boursa” Company.On the other hand, investing in “Boursa Kuwait” Company has all the financial incentives supporting the subscription decision. The first incentive is the vast difference of 137 fils between the cost of public subscribers and the cost of the main investor who bought the stock by bidding when the Boursa was privatized. The second incentive is that the Boursa has a financial performance record showing it achieved a 12 fils profit per share in 2018. This means that the subscriber may get a return on his investment for the current year within several months. Thirdly, the company’s management made great efforts to develop it before its privatization. This increased its liquidity measured by the value of its daily trading for the last part of the year to the end of November by 85.2%. In addition, confidence in it was 

boosted by the increase in the level of foreign investments. Increasing liquidity and the level of confidence will automatically turn to a significant increase in profits for the current year. Finally, there is a great opportunity for a high capital gain for the subscriber resulting from the likelihood that some people might buy what the citizens have at a price that bridges the gap between the subscription price and the price of the main investor.The success of the public offering is a good thing as it is a long-term repatriation of the citizens’ savings. What is lacking is linking any development project with the most important concerns of the country; i.e. linking the project and determining its success with the number of citizen’s sustainable job opportunities it creates and the possibilities of expanding in providing these opportunities. In Kuwait in accordance with PACI figures as of 30/06/2019, there are about 680 thousand citizens under the age of 21, more than 400 thousand of whom will enter the labor market within 15 years during which the public budget will not be able to add them to the masked unemployment numbers. The real danger is that they may turn into unveiled unemployment. Unless the rules of measuring what is developmental by linking it with job opportunities change, avoiding that risk is not possible.boosted by the increase in the level of foreign investments. Increasing liquidity and the level of confidence will automatically turn to a significant increase in profits for the current year. Finally, there is a great opportunity for a high capital gain for the subscriber resulting from the likelihood that some people might buy what the citizens have at a price that bridges the gap between the subscription price and the price of the main investor.The success of the public offering is a good thing as it is a long-term repatriation of the citizens’ savings. What is lacking is linking any development project with the most important concerns of the country; i.e. linking the project and determining its success with the number of citizen’s sustainable job opportunities it creates and the possibilities of expanding in providing these opportunities. In Kuwait in accordance with PACI figures as of 30/06/2019, there are about 680 thousand citizens under the age of 21, more than 400 thousand of whom will enter the labor market within 15 years during which the public budget will not be able to add them to the masked unemployment numbers. The real danger is that they may turn into unveiled unemployment. Unless the rules of measuring what is developmental by linking it with job opportunities change, avoiding that risk is not possible.