KUWAIT CITY, April 4: The Boursa Kuwait has witnessed a surge in trading accounts, yet the majority of these accounts remain inactive, highlighting a concerning phenomenon, reports Al-Jarida daily. At the end of the first quarter of this year, out of the 424,530 thousand registered accounts, only 17,717 thousand were active, leaving a staggering 95.7 percent of accounts inactive. This alarming trend warrants thorough analysis to uncover the underlying causes and propose effective solutions to revitalize the market. One of the primary reasons for this stagnation is the absence of initial public offerings (IPOs), leading to a lack of fresh listings and diminishing investor interest.

The reluctance to list persists, regardless of whether the stock exchange is government-owned or privatized. Moreover, the decline in market confidence, particularly in certain companies experiencing significant losses, has further dampened investor enthusiasm. To address this challenge, there is a pressing need for a sovereign fund to act as a market maker, injecting liquidity and restoring investor confidence. The government’s participation, alongside private sector involvement, can help bolster market depth and facilitate the success of new investment instruments. Leveraging the strength of the banking sector, which continues to demonstrate resilience and stability, is crucial in instilling confidence among investors. While the legislative and regulatory framework provided by the Markets Authority is robust, there remains a lack of proactive engagement from key stakeholders.

Investment companies, once pivotal players in creating investment opportunities, have seen a decline in their role and are struggling to compete in offering innovative products. Moving forward, collaboration between the Investment Authority and government agencies must be strengthened to harness available market resources effectively. With abundant liquidity in both the banking and private sectors, there is immense potential to capitalize on operational opportunities and drive market growth. The current year presents a pivotal moment for revitalizing the Kuwait Stock Exchange and sustaining the positive momentum observed in early 2024. By addressing the underlying challenges and fostering a conducive investment environment, Kuwait can unlock its market’s full potential and attract renewed investor interest.