The article (3) of the law states that the rules
applicable in the Kuwait Stock Exchange will be
applied on the shares possessed by non-Kuwaitis
in the share holding companies that are enlisted
with Kuwait Stock Exchange.
Trading system
The early 'over-the-counter' system or the open
system, which accomplished trading through negotiation
between the buyer and the seller, with absolute
freedom of price limits, led trading in the Kuwaiti
stock market into a speculative investment climate.
Speculation was the prime objective of dealers
which led to fragmentation of the market, where
prices differed from one broker to another.
In 1983 an Amiri Decree was issued which led to
the reorganizing, new administration and application
of new system where trading is consummated through
registering the bid and offer prices on the designated
board in the trading hall.
The Clearing and Transfer of Ownership
System
An Amiri Decree was issued in December 1986 concerning
organizing the trading activity and the clearing
system in the Exchange. The decree handed over
the duties of administration to the clearing chamber,
to clear the transactions for registered shares
in the market and to specify the parties and rights
of each deal.
Accordingly, the KSE committee issued resolution
No. 3 for year 1987 which placed responsibility
of clearing and providing the latest record of
names of parties holding shares to the registered
companies. In May 1987, a Director General resolution
was issued concerning the organization of settlement
and transfer procedures for listed shares. The
Kuwait Clearing Company (KCC) was assigned the
responsibilities of the clearing chamber in the
exchange. KCC is entitled to settle obligations
arising from transactions registered there.
The clearing system was a success and the Director
General issued another resolution in May 1988
regarding clearing process on the basis of net
balances. According to the new system, the clearing
company will deliver each broker a report the
following day showing the balance of his clients,
from cash and shares. The clearing company will
make a general settlement for all parties every
Saturday.
Kuwait Automated Trading System
KSE operates now on the most modern computerized
system. The Kuwait Automated Trading System (KATS)
is a computerized trading system based on software
specially developed and customized for the Kuwait
Stock Exchange.
One of its many features is the capability of
linkage with traders outside the Exchange, covering
all of Kuwait's governorates and possibility of
linkage with markets outside Kuwait in the future.
This system, while being very efficient, offers
security and fairness and equality between traders.
It guarantees complete confidentiality for traders
while completing transactions, thus increasing
trader confidence and transaction volume.
All information necessary for trading is available
readily. Authorized brokers have equal access
to the Exchange via a KATS workstation, in their
offices at the Exchange.
Brokers directly enter orders into computer linked
to the central exchange computer. The system immediately
checks the validity of the order and the information
is updated as it occurs with every new order and
trade. KATS users can watch the fluctuations of
the market as they occur. Within a few seconds
of an order placement, the broker knows whether
his order was traded, cancelled, or placed into
the order queue.
Brokers are assigned a user number by the Exchange
which allows them to access a variety of information
necessary for securities trading. Other great
advantage of KATS is the ability it provides to
broker to access various public, proprietary and
reference tables which may be necessary for trading
stocks in the regular market.
Some of the features of KATS are:
- Stock quotations table
- Individual stock indices
- Sectorial indices
- Daily quotations and index
- Monthly quotations and index
- Company background information
- Company financial data
In addition to easy placement of orders and access
to information, KATS allows brokers to send and
receive messages while trading, enabling the Exchange
to keep brokers abreast of the latest information
and permitting brokers to communicate with each
other.
Trading cycle
The interested client has to approach a brokers
office to fill out a form related to the opening
of a customer account through the Kuwait Clearing
Company. This is done to obtain the customer card
which bears the clients name and account number
used in the process of clearing transactions.
After this the process for a client-broker to
enter and complete a transaction using KATS is
as follows:
Interested client issues instructions personally
or phone. Broker logs on to KATS using his ID
number accessing the information needed for the
transaction. Broker opens stock order form and
enters the investors account number and the stock
ticker symbol and the direction of the order i.e.
buy or sell and the price of the order indicating
number of shares. When transaction is complete
the client is issued an account statement.
KATS automatically compiles data related to all
transactions and compiles it into the daily bulletin.
All tasks related to securities trading, quotations,
cancellations, replacements and odd lot orders,
are accomplished using the same simple format.
KATS keeps track of all trading activity and information
and provides a quick, accurate and efficient trading
cycle.
KSE Index
The Kuwait Stock Exchange adopted formula for
price index calculation based on the internationally
accepted standard for index computation. It automatically
adjusts for dividends and distribution reflecting
accurate results. Daily newspapers publish market
details.
KSE has total of 86 listed firms and in terms
of capitalisation Kuwait is second after Saudi
market in the Arab Gulf countries.
KSE Trading & Price Movement in
the year 2001
During the year 2001, the KSE witnessed several
developments in trading activity, prices, performance
of listed companies and market capita-lization.
The total value of traded shares during the year
2001 reached KD 3581.1 million (for 16299 million
shares) against KD 1290.4 million (for 6758 million
shares)for the previous year, i.e. an increase
of KD 2290.7 million, or 177.5% and prices of
listed company shares incresed by 26.8%. Also,
the total market value of traded shares in the
KSE rose by KD 1933 million (30.3%) compared to
the previous year. The daily average traded value
reached KD 9.4 million (181%) compared with the
previous year.
It is worth noting that year 2001 witnessed the
resumption of implemen-tation of the program for
the sale to the private sector of shares owned
by the government in certain listed companies,
whereby 113 million shares owned by the government
in the Mobile Telecommunications Company were
sold at KD 1.453 per share through public subscription
during the period from 2 to 16 April 2001; the
total transacted value reached KD 164 million.
Companies listed on the KSE recorded a rise of
23% in profits during year 2001, compared to the
previous year. The total profits realized by 81
companies out of 88 listed on the KSE at the end
of year 2001 reached KD 578 million from KD 470
million for the same companies in the year 2000,
a rise of KD 109 million.
The number of companies listed on the KSE at the
end of 2001 reached 88, of which 78 are Kuwaiti
companies and 10 non-Kuwaiti companies. Two new
companies were listed during 2001, one in the
investment sector and other in the non-Kuwaiti
companies sector.
The total nominal value of the listed companies
capital at the end of year 2001 reached KD 2.6
billion, of which 49% or KD 1.3 billion were accounted
for by the financial companies (companies listed
under banking, investment and insurance sectors).
Real estate companies followed with 16% of the
total or KD 0.42 billion. The total nominal value
of listed companies capital rose during the year
2001 by KD 49 million (1.9%).
KSE performance from January to September
2002
The Kuwait Stock Exchange (KSE) was more active
during the first half of 2002 compared to the
same period of 2001; leading to an increase in
all its major indices. The total traded value,
up to 30/6/2002 was KD 3,580.1 million, with a
daily average of KD 30.1 million; an increase
of 134.1 per cent and 400.7 per cent over 2001
daily average and 2000 daily average respectively.
April 2002 was the most active month in terms
of trade volume and the number of shares exchanged.
June 2002 was most active in terms of value traded
since it reached KD 944 million.
Value of traded shares during the third quarter
of 2002 (July-September) recorded KD 1,342.4 million,
about 46.9% of the value of shares traded during
the second quarter of 2002 that reached around
KD 2,527 million. Average daily traded value registered
KD 21 million which was lower than that of the
second quarter (39.5 million) but higher than
the first quarter (KD 19.1 million).
During the first nine months of 2002 value of
traded shares reached KD 4,922.5 million reflecting
a sharp rise of over 66.2 per cent of the traded
value during the same period of 2001(KD 2,962
million).
According to Al-Shall report, information collected
on 82 companies for the first quarter of 2002
show collective profits to reach KD 166.5 million,
compared to KD 203.4 million for the same companies
for the first quarter of 2001, a decrease of 18.1%.
BACK
