2 of 3 Main Indices in Kuwait Stock Exchange Post Gains Despite Trading Suspension
By Vittorio Hernandez | August 19, 2014 8:25 AM EST
Kuwait's regulator suspended on Sunday the trading of shares of listed companies that did not submit their quarterly results. However, despite the action, two of three indices in the Kuwait stock market still posted gains.
Investors speak as they monitor screens displaying stock information at the Abu Dhabi Securities Exchange in this June 25, 2014 file photo. Dubai's stock index rebounds into positive territory as investors buy beaten-down property-related stocks, after the market earlier plunged as much as 5.4 percent. The index recovers to stand 1.1 percent higher at 3,987 points, bouncing back above the 200-day average at 3,866 points, which is seen as an important technical indicator. REUTERS/Stringer/Files (UNITED ARAB EMIRATES - Tags: BUSINESS)
The price index of the Kuwaiti Stock Exchange reached 7,266 points on Sunday, logging a gain of 31.9 points. The weighted index also gained 0.81 points, but the KSX 15 shed 2.61 points.
Financial analysts explain the gains to the market's ability to surpass the negative impact of the trading suspension due to the growing awareness of companies as well as many of the suspended shares were of low value anyway.
The trading suspension happens every three months, causing many traders to get used to this quarterly event and adapting to the situation, KUNA quoted Mohammad, a financial analyst and head of Al-Tarrah, the traders association.
Adnan Al-Dulaimi, another financial analyst, agreed that the market value of the suspended firms is small in comparison to leading companies that still could trade.
Analyst Al-Shammari added that most of the companies whose shares were suspended were the speculative ones that usually delay their submission of requirements to the regulator to take advantage of the grace period even if their quarterly reports have actually been prepared.
Also last week, Kuwait Food Co, the operator of fast food chain KFC and Pizza Hut, suspended the trading of their shares on the Kuwaiti Stock Exchange while holding talks with the Savola Group of Saudi Arabia. The two listed firms are discussing the sale of Kuwait Food stakes to Savola.
News of new investors boosted Kuwait Food shareprices by up to 3.2 per cent - the highest since July 3. Before the suspension of trading of its shares, stocks of the food firm was trading 2.6 per cent higher.
Savola, valued at $12 billion, confirmed to Bloomberg that it has inked a confidential agreement with Kuwait Food, also known as Americana, but the talks have not reached yet the fundamental development stage.
Besides running KFC and Pizza Hut restaurants, Americana also makes California Garden beans and Farm Frites frozen veggies.
Mandatory quarterly reports as well as suspension of trading while negotiations for a buy-in or sell-out are ongoing are some of the stock market issues that retail investors should be aware and learn as part of investor education so they could make informed decisions.
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