Founded on 14th August, 1983 the Kuwait Stock Exchange (KSE) quickly became established as one of the foremost bourses in the region. Now, in Kuwait’s golden year, it remains one of the best regulated and top-performing stock exchanges in the world. Here we take the long-view of the history of Kuwait’s Stock Exchange.
Kuwaiti nationals have been acquainted with share trading since the establishment of the first Kuwaiti shareholding company, the National Bank of Kuwait, which introduced its share for public subscription in 1952. The establishment of the Kuwait Cinema Company soon followed.
The first dealing in the stock exchange was done through real estate brokerage offices and public cafes at the merchant’s market, where each broker represented an individual market, specifying the selling and the buying prices as well as the quantity that would be traded, according to the demands of investors.
The initial stage of trading acquired a significant distinction, not only due to the fact it represents the prime phase of the establishment of Kuwaiti shareholding companies, and the emergence of the first local shares to be traded in Kuwait, but it also attained its importance because this period set the precedent for the organization of the modern Kuwaiti economy. This period also saw the beginning of Kuwaiti capital inflow from abroad, either channelled to direct investment or to local banking investment, as well as imported goods and services.
This influx of capital increased the gap between the accumulation of surpluses and savings, and the ability of the economy to absorb these increases.
During this period of transformation from a traditional economy to the oil economy, there was no stock market in the actual sense, due to the limitation of issued shares.
The first law to organize the stock market in Kuwait was issued in October 1962. It addressed the topic of organizing the stocks of companies established abroad. In addition to this, Commercial Law Number 15 for the year 1960 had a significant role in organizing the issuance of shares and the subscription in them.
The sixties witnessed the establishment of several shareholding companies in various economic activities; yet no law was issued to systemize the trading of the shares of those companies during that decade. However in 1970 Law Number 32 was issued concerning the regulation of stock trading in shareholding companies. This law is therefore considered the first significant step towards the organization of trading in local shares. It necessitated the formation of a consultation committee that constituted the supervision of trading and the following assignments:
1 - to structure the legislative articles and the organizational activities related to the stock market and foreign currencies.
2 - to design a framework of proportions focusing on establishing stock markets and contracts.
3 - to set the necessary laws to preserve the material and end economic interest of the country, in the event of unusual fluctuations in the prices of stock market shares.
4 - to assess foreign companies that wish to register their shares in Kuwait.
In November 1970 the Minister of Commerce and Industry issued resolution number 32 concerning the trading of shares in Kuwaiti shareholding companies.
In February 1972 the first premises for the securities trading section was inaugurated in the Fifth Commercial Area in Kuwait city, where employees of the exchange tracked what shares had been traded during the day, then issued a daily report detailing the number of traded shares, prices, and the number of transactions executed. This was distributed to the brokerage offices and to the media.
In November 1976, Ministerial Resolution 61 was issued to organize dealing in Kuwaiti shareholding company shares; it also designated the first committee in the ministry to supervise these Kuwaiti shareholding companies as well as insurance companies and to regulate the trading of shares.
In April 1977 the stock exchange had been opened, this was later referred to as the Kuwait Stock Exchange. The exchange continued working according to rules stated in Resolution 61 until August 1993.
At that time an Amiri Decree was issued concerning the reorganization of the exchange as an independent financial institution, based according to yet more updated concepts and principals, managed by the exchange committee and by an executive administration.
Kuwait Stock Exchange Objectives
1 - The Kuwait Stock Exchange enjoys an independent judicial character with the right of litigation in a mode facilitating the performance of its functions for the purpose of realizing the objectives of its organization in the best manner within the scope of regulations and laws governing the Stock Exchange operations.
2 - The Stock Exchange shall within its activity act to direct and rationalize dealing in stocks and securities, within the scope of its powers in order to develop and stabilize dealing in securities in a manner securing safe, easy and accurate transactions so as to avoid any confusion in dealings.
3 - The Stock Exchange, in pursuance of the research and the studies concluded by it and its follow up of the security dealing process shall render appropriate advice and opinion to the competent government authorities regarding the financial status of the Stock Exchange member companies and means of promoting their efficiency for realization of their relevant objectives.
4 - The Stock Exchange shall participate with the competent authorities in order to realize coordination and integration among the financial and the economic activities and the capital movement so as to assist in achieving the economic and the financial development and stability of the state.
5 - The Stock Exchange staff shall continue to develop the systems and the methods of dealing in securities, besides introducing modern techniques such as those applied in advanced stock markets for the purpose of achieving a sound financial position for the Kuwait Stock Exchange on both, regional and international levels.
6 - The Stock Exchange acts to encourage saving, promote investment awareness among citizens, protect depositors and create means for investment of funds in securities, in a manner beneficial to the economy.
Ladies Trading Hall
The opening of the Kuwaiti Ladies Trading Hall is considered a distinguished achievement no other Stock Exchange has accomplished.
It was opened on 28th January 2003 on the premises of KSE with the aim of creating an adequate environment for businesswomen to trade their investment.
The Ladies Trading Hall is equipped with the most advanced computer screens to enable them to follow the activity of the market as well enabling women brokers to represent the brokerage firms listed in the Exchange.
First published in Men's Passion issue #27 December-January 2010-11
