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Kuwait bail-out gathers pace

One month after the Kuwaiti stock exchange reached its lowest point for more than three years, there has been a turnaround. On November 17, the market had lost almost half its value since the beginning of the year and fallen by about a third in just one month. One month later, however, it had recovered almost half the previous month’s loss. Why?

Faisal Hasan, head of research at Global Investment House, says government and central bank support for struggling investment companies is helping.

Investment companies in Kuwait are in trouble because of stock market losses coupled with a now unviable reliance on dollar funding, according to Ali Khalil, executive vice-president at Markaz, a Kuwaiti investment company. Khalil says Markaz is not one of the struggling investment firms because its own dollar bond matures in four years’ time.

Hasan’s Global, however, had already been unable to meet one obligation because of cashflow problems, as Euromoney went to press. The firm said Commercial Bank of Kuwait would advise it on renegotiating existing facilities.

Investment companies play a larger role in Kuwait than in other stock markets in the Gulf. They have helped foster a culture of research and institutional investing lacking elsewhere in the region.

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