Chart of the week: Kuwait’s stockmarket is ready for take-off

The KMEFIC FTSE Kuwait Equity UCITS ETF (LSE: KUWP) has made little progress since HANetf launched it in London earlier this year. But that could soon change. Kuwait is due to be promoted from a “frontier” market to an emerging one by index provider MSCI next June. That should entice almost $10bn of global investors’ cash into the market, reckons HANetf.

The overall market capitalisation of the local index is only around $30bn. Meanwhile, Kuwait has the world’s sixth-largest oil reserves, but is sensibly diversifying in an effort to become a regional commercial and financial hub. The ETF, which tracks the FTSE Kuwait All-Cap 15% Capped index comprising small, mid and large caps, has low exposure to oil.

“[Last week] talk of the Dow Jones… at 30,000 didn’t seem so fanciful as when Barron’s suggested it in January 2017, as the blue chips hit 20,000…  ‘the global economic backdrop has, for the first time in 18 months, begun to improve’, writes Michael Pearce [of] Capital Economics. It’s not just because of prospects of a trade deal. Recession risks have, well, receded. Growth may slow to a 1% annual rate in the current quarter, but odds of falling into an outright recession have slid… the risks from financial excesses still appear moderate, according to Goldman Sachs economist David Mericle. Commercial real-estate risks have eased, helped by slower price appreciation and better rents. Corporate debt is high, compared with GDP, but a better comparison is debt versus earnings and assets. Those metrics are not at alarming levels, even for high-yield issuers.”
Randall Forsyth, Barron’s

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