Kuwait bourse plans derivatives trading amid push for more IPOs

Boursa Kuwait Securities plans to add derivatives and futures products to boost liquidity and attract more companies to list.

The exchange expects some family-owned businesses to list soon, followed by government-controlled companies, said chief executive officer Mohammed Al-Osaimi. Boursa Kuwait has standardised listing rules, which should streamline the process for companies to go public, he added.

The move is part of a wider regional trend, with exchanges in Saudi Arabia and the UAE ramping up efforts to encourage listings and attract foreign flows. Soaring commodity prices have made energy and raw material producers in the Middle East more attractive, and prospects of rate hikes are set to benefit bank stocks, which make up a big part of benchmarks in the Middle East.

Kuwait’s Premier Market Index is up 9 per cent this year on a US dollar basis, making it the 10th best equity benchmark in the world, according to data compiled by Bloomberg.

The Kuwaiti stock exchange plans to introduce a central counterparty service for the cash market by the end of the year, Al-Osaimi said.

Derivative products, such as index and single-stock futures, would come a year later. The exchange is close to launching a fixed-income market for corporate bonds and sukuk, he added.

Special purpose acquisition companies, which can provide a quicker route to going public than a fully-fledged IPO, will be considered if there’s demand. “Currently, we are still studying it and how it would impact future listings, and whether its legal framework requires the introduction of new laws or amending existing ones,” Al-Osaimi said.