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Kuwaiti stocks end 2006 down for first time in six years

Filed on December 27, 2006

KUWAIT CITY - Kuwaiti shares ended 2006 lower in their first yearly drop since 2000 after enduring strong correction pressures and a string of economic and political events, analysts said on Wednesday.

The Kuwait Stock Exchange (KSE) Index closed on Wednesday, the last day of trading for the year, on 10,067.40 points, down 12 percent on its 2005 close of 11,445.10 points.

The index also was down 16.5 percent on its all-time high of 12,054.70 points set in the first week of February, but managed to cruise above the 10,000-point psychological barrier after dipping below 10,000 points a number of times toward the end of the year.

“The market has been influenced by a string of surprising events ... starting with the death of late emir Sheikh Jaber Al Ahmad aAl Sabah,” which was followed by a power struggle within the ruling family, the Al Juman Economic Consulting Center said in a report.

“The market was also affected by the crash in neighbouring Gulf states and a bitter dispute between the government and parliament which resulted in dissolving the house and calling for fresh elections,” it said.

“The overall market performance however has been positive despite the drop, since it somewhat remained steadfast in the face of major events,” it said.

The Kuwaiti market fared much better than major bourses in the neighbouring oil-rich Gulf states of Saudi Arabia, United Arab Emirates and Qatar, each of which lost at least 40 percent of its value.

The market, which dipped to record lows in the late 1990s, has been steadily rising since then without undergoing any significant correction, spurred by abundant oil revenues and a favourable political climate.

The index closed 2001 and 2002 up 26.8 percent and 39 percent, respectively. It ended 2003 a staggering 101.7 percent higher, before slowing down in 2004 to finish up 33.8 percent. It rose 78.8 percent last year.

This year’s average daily trading dropped 37.7 percent to 71.2 million dinars (246 million dollars) from 2005 all-time high of 114 million dinars (390 million dollars). The average for 2004 and 2003 was 208.8 million dollars and 223 million dollars, respectively.

Annual turnover was about 61 billion dollars, down from 100 billion dollars last year.

Economists expected a better performance in 2007.

“The index is expected to rise between 25 percent and 30 percent in 2007 after the market has efficiently absorbed this year’s shocks,” Kuwaiti economist Hajjaj Bukhdour said.

“The bourse will be more stable as liquidity levels will not fluctuate sharply as they behaved this year. Many companies have adjusted their position and are more focused on operational activity,” Bukhdour told AFP.

The KSE has a capitalization of 143 billion dollars, almost the same as last year’s 140 billion dollars, mainly due to the listing of 21 new companies.

The KSE lists 179 Kuwaiti and foreign companies. It is the second largest stock market in the Arab world in terms of capitalization after the Saudi bourse.

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