Boursa Kuwait transforms trading methods ahead of EM index ascent

By Rahul Vaimal, Associate Editor
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Boursa Kuwait
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Boursa Kuwait, the national stock exchange of the country is transforming some of its trading methods as the market’s biggest shares are being included in the Morgan Stanley Capital International (MSCI) Emerging Markets Index.

According to Boursa Kuwait and the Kuwait Clearing Company, the new measures will bring Allocation Consolidation Module accounts, which aids large assets managers to aggregate orders made when settling trades at the end of a session.

Some specific measures are also being taken while including the biggest shares by extending the closing auction and a Trade At the Last session.

Noura Al-Abdulkareem
Noura Al-Abdulkareem
Head of Markets – Boursa Kuwait

“The new measures will further enhance the efficiency, appeal and performance of the market to attract investments from local and international investors and is a testament to Boursa Kuwait’s commitment to bolster our reputation for providing issuers with efficient access to capital and investors with diverse return opportunities.”

MSCI’s Emerging Markets Index is passively tracked by exchange-traded funds containing billions of dollars. As of September 30, the index was made up of 1,392 constituents from 26 emerging markets, covering about 85 percent of the free-floating market capitalization of these markets.

Boursa Kuwait’s launch into the emerging market status of MSCI is followed by the upgrades of the UAE and Qatar stock markets in 2014 and Saudi Arabia in 2019.

As per Kamco Research, Kuwait currently has the biggest share of MSCI’s more junior Frontier Market, with about 26.29 percent of the entire index. As a result, the scaling of the stock exchange is happening slowly, in five phases commencing from this month and ending in November 2021.

Kamco Research calculates passive funds that worth about $2.9 billion will flow into the shares of the seven biggest stocks of Boursa Kuwait including the National Bank of Kuwait, Kuwait Finance House, Zain, Agility, Boubyan Bank, developer Mabanee and Gulf Bank of Kuwait.

Boursa Kuwait has already been scaled up into the position of an emerging market by two other major index providers. In 2018, S&P Dow Jones Global Equity Indices marked it as an emerging market and was added to FTSE Russell’s Emerging Markets Index in September 2017.