WHEN the Norwegian sovereign wealth fund invests in the Kuwaiti stock market, it is a sign of approval and trust in the Kuwait Stock Exchange (Boursa). China is also actively investing around $500 to $600 million in Kuwait, with commitments ranging across various listed companies. These investments span from individual or family-owned businesses to major banks, with ownership stakes varying from less than one percent to five percent, and investment amounts ranging from less than $100 million to $350 million.

China has currently invested in over 16 listed companies on the Kuwait Boursa. While the current involvement is relatively modest, it is expected to grow as China gains more experience and knowledge, potentially attracting additional foreign investment in the future. While Kuwait’s investments in China significantly exceed this amount, surpassing $4 billion, it is worth noting that China has long been a major importer of Kuwaiti crude oil and refined products.

Kuwait was among the first countries to export crude and finished petroleum products from Shuaiba Refinery, and this then extended to all three of our refineries. In addition, we exported products from the Aden Refinery in the late 1970s. China’s method of selecting investment opportunities in Kuwait is a strategic one. For example, their largest investment - five percent ownership in the privately owned Al-Jazeera airlines - is valued at KD 33 million. They also hold a three percent stake in a privately owned car dealership, amounting to KD 28 million.

There is no question that China has employed specific criteria to facilitate its investments in the global stock markets, which the Kuwait Boursa must meet. These criteria often involve factors such as market liquidity, with daily trading volumes between $50 million to $100 million, and company market capitalizations meeting a certain threshold. Typically, investments range from two percent to five percent of a company’s total shares, although in Kuwait, China’s stakes can be as low as one percent. This lower percentage may reflect China’s initial experience with smaller markets compared to global stock exchanges.

As the Kuwait Stock Exchange (Boursa) gains experience and maturity, it is anticipated that investment from various countries and companies will increase. The Kuwait Stock Market is already gaining global attention due to its openness, transparency, and independent judicial system, along with the freedom of press, which are the key components of a democratic society supported by our parliament. Yes, Kuwait takes great pride in its financial institutions.

By Kamel Al-Harami
Independent Oil Analyst
Email: naftikuwaiti@yahoo. com