Kuwait's stock market suffered a blow to its prestige last year when global index compiler MSCI decided to upgrade Qatar and the United Arab Emirates, leaving Kuwait languishing in a lower category. Being left behind may prove profitable for investors in Kuwaiti shares, however.
Qatar and the UAE will move up from frontier market to emerging market status at the end of May, leaving a big void in MSCI’s frontier index, which will have to be readjusted.
Kuwait will remain in the frontier index and become by far the biggest market there. So its weighting in the index is expected to rise sharply – potentially attracting hundreds of millions of dollars of fresh foreign money to the country.
The weighting increase “should provide significant additional liquidity into the Kuwaiti market, and therefore be a positive for Kuwait,” NBK Capital said in a research note.
In recent days there have been early signs of some institutional investors buying beaten-down Kuwaiti blue chips in anticipation of them drawing more interest after rival Qatari and UAE stocks have left the frontier index, traders say.
These include National Bank of Kuwait and telecommunications operator Zain, which are among the top constituents of the MSCI frontier market index.
Investors have good reason to be disappointed by Kuwait: persistent tensions between the cabinet and parliament, and a sluggish bureaucracy, have delayed economic development plans and slowed improvement of the country’s poor infrastructure.
The main Kuwait share index is up 25 per cent since the end of 2012, compared to a 37 per cent rise by Saudi Arabia, 36 per cent by Qatar and 142 per cent by Dubai.
But “passive” investors, which use MSCI weightings to guide their investment choices, are expected to put more money into Kuwait when its share of the frontier index rises.
The Kuwaiti market, which has a capitalisation of about US$110 billion, had the biggest weight in the frontier index at the end of February with 17.9 per cent. The UAE had 17.3 per cent and Qatar 16.6 per cent.
NBK estimates that after Qatar and the UAE leave, Kuwait’s weighting could increase to around 30 per cent. A rise of 12 per centage points would imply an additional inflow of about $700 million into Kuwait – more than the approximately $500m in passive funds which analysts estimate Qatar and the UAE will each gain from their upgrades.
Last year, Morocco demonstrated the benefits of being a relatively big fish in a small pond.
In November it was downgraded from MSCI’s emerging markets index, where it had a miniscule weighting, to the frontier index, where it has a 4.6 per cent weighting. The Moroccan stock index jumped 10 per cent in the preceding weeks.
The question is whether other economic and financial developments in Kuwait will combine with the expected inflow of MSCI funds to support an extended rally by the stock market.
In February, the government approved bids worth a total of $12bn for major upgrades at two oil refineries. Some investors see this as a sign that authorities are finally moving ahead with economic development plans.
“For the first time ever, there are some government changes – there is a massive pent-up demand for infrastructure work and the government can’t wait anymore,” said Rami Sidani, Schroders’ Middle East head of investment.
“We’re at a turnaround and the government will start pressing ahead, albeit slowly. On the ground, projects are starting to take off, which means there will be lending opportunities for the banking sector.”
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
MATCH INFO
Rugby World Cup (all times UAE)
Final: England v South Africa, Saturday, 1pm
The Old Slave and the Mastiff
Patrick Chamoiseau
Translated from the French and Creole by Linda Coverdale
Slow loris biog
From: Lonely Loris is a Sunda slow loris, one of nine species of the animal native to Indonesia, Malaysia, Thailand and Singapore
Status: Critically endangered, and listed as vulnerable on the International Union for Conservation of Nature red list due to growing demand in the global exotic pet trade. It is one of the most popular primate species found at Indonesian pet markets
Likes: Sleeping, which they do for up to 18 hours a day. When they are awake, they like to eat fruit, insects, small birds and reptiles and some types of vegetation
Dislikes: Sunlight. Being a nocturnal animal, the slow loris wakes around sunset and is active throughout the night
Superpowers: His dangerous elbows. The slow loris’s doe eyes may make it look cute, but it is also deadly. The only known venomous primate, it hisses and clasps its paws and can produce a venom from its elbow that can cause anaphylactic shock and even death in humans
BIG SPENDERS
Premier League clubs spent £230 million (Dh1.15 billion) on January transfers, the second-highest total for the mid-season window, the Sports Business Group at Deloitte said in a report.
THE SPECS
Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Teachers' pay - what you need to know
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
- in Indian schools, it has also become common for teachers to share residential accommodation, living in a block with colleagues
PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Know your camel milk:
Flavour: Similar to goat’s milk, although less pungent. Vaguely sweet with a subtle, salty aftertaste.
Texture: Smooth and creamy, with a slightly thinner consistency than cow’s milk.
Use it: In your morning coffee, to add flavour to homemade ice cream and milk-heavy desserts, smoothies, spiced camel-milk hot chocolate.
Goes well with: chocolate and caramel, saffron, cardamom and cloves. Also works well with honey and dates.
More Iraq election coverage:
THE LOWDOWN
Romeo Akbar Walter
Rating: 2/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Robby Grewal
Cast: John Abraham, Mouni Roy, Jackie Shroff and Sikandar Kher