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Expat wanderer

Kuwait Stock Exchange Closing Poll

This is from today’s Al Watan. I think investors all over the world have confused saving with investing. When you know your family is going to need the money, for something like a vacation, a new washing machine, a car – you save. When you have the luxury of a little extra that you can afford to lose, you invest. Smart investors will investigate the investment carefully. If the market goes down, but the company whose shares you bought is still solvent and strong, you hang on – after all, it you didn’t invest anything you can’t afford to lose, right?

Lawmakers alarmed by bourse closure
Attorney lauds court order, says action was necessary

Ghenwah Jabouri
and agencies

KUWAIT: A number of MPs have criticized a Court of First Instance order to halt trading on the Kuwait Stock Exchange (KSE), saying that the court”s move is “the most dangerous decision” ever taken in relation to Kuwait”s economy and bourse.

They explained that closing the bourse has cemented a lack of confidence and will drive the index down further once trading resumes, while rhetorically asking who would bear the consequences of such an eventuality.

They also stressed the need to benefit from the experiences of other countries to strengthen the Kuwaiti stock market.

The MPs also called on the government to take measures to limit damages resulting from the closure of the KSE.

In an exclusive statement to Al Watan Daily, attorney Labid AlـAbdal said the global financial crisis is finding its effects on many strong markets around the globe and that the situation requires Kuwait and other GCC countries to draw up a serious plan to protect its markets.

“Kuwait should choose safe investments and strengthen its reserves of gold at the Central Bank of Kuwait,” he added.

He stressed that most of Kuwait”s active financial and commercial companies are directly and indirectly linked to the international economy and that they will need well supported banking systems to maintain safe credit transactions and protected debt recovery.

“Given the mentioned circumstances, closing the local stock market in Kuwait is a necessity to prevent further losses by registered companies and to protect the citizens from losing any more assets,” he explained.

Kuwait must select very protective measures, especially after the fall of the oil price and the lack of trust in the international financial system,” AlـAbdal concluded.

Last updated on Friday 14/11/2008

What do you think? Do you think closing the Kuwait exchange prevented further losses, or do you think closing the exchange fed the fear that is feeding the rapid decline? Or do you have another opinion totally?

November 14, 2008 - Posted by | Bureaucracy, ExPat Life, Financial Issues, Interconnected, Kuwait, Living Conditions, Technical Issue

10 Comments »

  1. To me it’s a smart move to limit the abuse of stock market here in Kuwait. This will send out a message to all those who have played in the past years that they will no longer control the market for themselves. All we need before opening it again is to insure transparency.

    Comment by MacaholiQ8 | November 14, 2008 | Reply

  2. This is when you have mixed roles in a society, judges’ engage in business, businessmen became politicians and rules became investment tycoons. As a human being this can really affect your judgment, it’s only natural that you follow what is best for your interest and not what is right. It is not the judicial authority to decide what is best for the economy!

    Comment by error | November 14, 2008 | Reply

  3. you know my take on the situation,…

    having said that, there is news that the scope of the problem is alot bigger than just a couple of rich old dudes losing money.

    its no secret that alot of the companies here, listed and unlisted play the market with leverage on a regular basis. so their earnings are being affected in a big way. even basic service and industrial companies here are actually nothing more than investment companies trading the markets. the crash was flushing out these companies, which is a good thing. and i think it was half way thru the process. now the dynamics have been messed up and has to be reset.

    there is talk that what should be flushed is actually alot bigger of a stinker than most of us realize. as error seems to imply, if everything is flushed out then the economy would emerge stronger, i dont think its on a scale that the economy couldnt handle,…. sure it would have been ugly, but not debilitating.

    its just that the participants couldnt handle the consequences of something they shouldnt have been doing anyway.

    conspiracy corner: this might not have passed had the big boys thought it was a good idea, but i could be wrong.

    i still think it was a dumb move, unless something big happens in the meantime.

    Comment by sknkwrkz | November 14, 2008 | Reply

  4. Mac, Error, Skunk:
    You have all made good points, and covered areas not covered in the newspapers. There is always the story behind the story here, and I thank you for helping me understand more of the factors involved. I know I can always count on your for insights and lucidity, sometimes more than a little sarcasm. 🙂 This time, you all played it totally straight. Thank you.

    Comment by intlxpatr | November 15, 2008 | Reply

  5. Last week, the private sector took on the government of Kuwait and successfully forced the government to keep the Kuwaiti Stock Exchange (KSE) closed for at least five total days.

    In the Kuwaiti system of politics, governance and constitutions, it took only a pair of disgruntled lawyers 9and investors), Adel Abduhadi and Khaled Al-Awadhi, to persuade the Kuwaiti courts to intervene and try to stave off more national losses of investment at the national stock exchange.

    The FRIDAT TIMES stated, “Judge Najeeb Al-Majed issued the order to suspend trading immediately until the court can decide on the case. The court may extend the suspension or could reject it.”

    Hundreds of disgruntled investors cheered both inside and outside the exchange at hearing the news of the closure

    Imagine if American investors had been permitted to close down the U.S. Stock exchanges for the period of several cooling off weeks in September through November, i.e. possibly trillions of dollars might have been saved.

    Then again—perhaps not! Financial sector regulation has been poor globally.

    However, with the world economic summit of 20 nations taking place in the USA this weekend, the timing is fairly important for this event. “The KSE has been in a freefall the past few months. It has lost 45 Percent since June 24 when it hit an all-time high of 15,654 points.”

    The Kuwait court decision to accept this call for a freeze at the exchange stated that the court “found that the bourse management [had] failed to take any measure to confront the global crisis which has created havoc in the investments of traders in the market.”

    On the other hand, the Kuwaiti government is every bit as slow-footed as the U.S. government, i.e. in terms of getting both the securities and financial sectors regulated properly as per law or mandates. NOTE: The Kuwait government has intervened to protect some financially strapped banks and local savers’ assets in recent weeks.

    Therefore, it is certainly not certain that the record slide in the KSE will not continue.

    Nonetheless, a breather for planning and preparing is always more helpful than allowing heady confusion in an unregulated market arena.

    Comment by Kevin Stoda | November 15, 2008 | Reply

  6. Interesting comment, Kevin. These crashes and corrections, in my opinion, happen, and usually for a reason. This time, faith in the market has been deeply shaken a by combination of the unacknowledged bad debt taken on by loan originators, and bought by greedy bankers. Many many people knew there was a problem, like an elephant in the living room, they pretended it wasn’t there and hoped it would just go away. In the US, utter recklessness and lack of regulation has taken its toll.

    Here in Kuwait, it seems to me, people were “playing” the market, using it more as a pastime, and a way to feel good about increasing value, even if it was all on paper. It’s like they never saw it as a gamble, never saw the risks involved, thought it was a sure thing. Isn’t there any disclosure law in Kuwait?

    God willing, this instability and cascading market values will end up with measures put into place to insure transparency. I don’t think there is anything we can do about people who invest thinking it is a sure thing, but we can make sure the information is available, and as accurate as possible.

    The cynical side of me thinks that no matter how much we regulate, there will always be people who can find a loophole, a new angle, and every investor needs to BEWARE! Be very aware! 🙂

    Comment by intlxpatr | November 16, 2008 | Reply

  7. I know one of the lawyers and he’s a dumbass. If someone with a double-digit IQ can influence the economy of an entire nation, what does that say about the country?

    Further, I think this case sets a really bad precedent for future lawsuits in the country.

    Comment by Pamela | November 16, 2008 | Reply

  8. lmao@ pamela’s character description!

    Comment by sknkwrkz | November 16, 2008 | Reply

  9. here is an old stock market joke ;

    how do you end up with a million Kd by investing in the stock market , Answer start with a hundred million Kd

    Comment by daggero | November 16, 2008 | Reply

  10. Pamela, I am really restraining myself here. IQ does not seem to be a requisite for leadership roles in national government in any nation on earth. There was a lot of strong feeling in Kuwait that the bourse needed a breather, to stop the panic selling. I believe in a free-market, and at the same time, thoughtful regulation of the market. The lawsuit, I hope, is an anomaly.

    Skunk: 😛

    Daggero: LLLOOLLLL. I hope you didn’t make anybody cry. It might be too true to be funny.

    Comment by intlxpatr | November 16, 2008 | Reply


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