Kuwait bourse debuts in region’s best 1st-day pop for a year

Boursa Kuwait surged more than 10-fold in its trading debut on Monday as it became only the third publicly traded exchange in the Middle East.

Shares in the bourse operator rose as high as 1,210 fils, after being sold at 100 fills in an offering to Kuwaiti citizens last year. It’s the strongest debut of any stock in Europe, the Middle East and Africa for a year.

They pared the increase to 1,055 fils at the close, with the country’s Premier Market finishing 0.4 per cent higher.

The trading debut was initially expected to take place in April and comes ahead of Kuwait’s upgrade to the group of countries classified as emerging market by MSCI in November, a move anticipated to trigger inflows from foreign investors.

Boursa Kuwait joins Dubai Financial Market and Tel Aviv Stock Exchange as publicly traded regional exchanges. The sale of 50 per cent of the company to individuals followed a 44 per cent sale to a consortium of domestic and international investors last year, and was the last stage of a privatisation process.

The remaining 6 per cent is owned by the country’s Public Institute for Social Security.

While Monday marked the stock exchange’s debut, the shares have been traded on the local over-the-counter platform since January 15. The price of 100 fils a share was set by the Capital Markets Authority law that mandated the privatisation of the Kuwait Stock Exchange.

Boursa Kuwait “is being listed at a 40-50 per cent discount to its EM peers, despite enjoying higher margins, returns on capital, and historical earnings growth,” said Gus Chehayeb, the chief investment officer at Sancta Capital Group in Dubai. Sancta Capital has been buying Boursa Kuwait shares in the over-the-counter market since January.

“Note that Kuwait has a history of redistributing its wealth among its citizens by essentially gifting them stakes in recently privatised lucrative state-owned assets,” said Chehayeb.

The shares outstanding and traded on Kuwait’s exchange have a combined market value of about $91bn, according to data compiled by Bloomberg. That compares to $157bn for the Tel Aviv Stock Exchange and $265bn for the combined markets of Dubai and Abu Dhabi.