Mohammad Al Osaimi, CEO, Boursa Kuwait: Interview

Interview: Mohammad Al Osaimi

In what ways are Kuwaiti capital markets becoming more attractive to foreign investors?

MOHAMMAD AL OSAIMI: The Kuwaiti capital markets have been reclassified as an emerging market in the world’s leading index providers thanks to its development.

Boursa Kuwait is working in collaboration with the Capital Markets Authority and Kuwait Clearing Company on various products and services to improve liquidity and transparency – including netting, market makers, margin lending and trading – as well as short selling and security lending, and borrowing. Over the past few years, we have introduced tradable rights issues, real estate investment trusts and tender offers. We also expect to roll out exchange-traded funds and a corporate fixed-income platform.

Boursa Kuwait has updated its listing criteria, a move that in turn has bolstered transparency in order to expand the issuer base in the premier market by potentially increasing the number of medium and large-sized companies listed.

Additionally, we continue to organise corporate days and roadshows to showcase some of the listed companies and investment opportunities in the financial sector, putting those companies in touch with some of the world’s leading investment firms and financial institutions. The events highlight the financial health of the sector while communicating the benefits of investing in local companies. They have been successful in attracting foreign investment as well, with foreign trades constituting 17% of the total trades in the first nine months of 2022.

How has the adoption of environmental, social and governance (ESG) principles benefitted the domestic financial market?

AL OSAIMI: The Kuwaiti capital markets were some of the earliest adopters of ESG principles, and in our experience, market participants are keen to incorporate these principles in their daily operations. To aid listed companies in their adoption of ESG, Boursa Kuwait published an updated ESG disclosure guide, which was received with positive feedback.

Along with the inclusion of Kuwaiti companies in global indices such as the FTSE Emerging Index, the Dow Jones Emerging Markets Index and the MSCI Emerging Markets Index, some companies were added to these institutions’ ESG indices as well. The MSCI ESG indices and the FTSE4Good Index include several local companies, demonstrating an awareness of the importance investors place on ESG metrics, and the fact that some funds have been divesting from companies that do not meet ESG criteria.

Where do you see space to promote more sustainable investment practices?

AL OSAIMI: The impact of climate change, social inequality and geopolitical tensions have created a sense of urgency and awareness throughout the world. These issues prove that many of the scenarios we thought were impossible could become a reality, and that we need to act to address these challenges.

One way we can do that is by introducing tools like green and social bonds, as well as ESG indices, which will enable the growth needed in sustainable finance. In addition, we must promote the adoption of more sustainable standards and practices. As an intermediary between issuers and investors, Boursa Kuwait organises workshops and training sessions for listed companies in an effort to educate market participants in sustainability and ESG reporting, and implementation. We expect that this will help companies attract more sustainable investors.

The exchange published its first standalone sustainability report in 2022, which detailed the company’s strategy, partnerships and initiatives. We hope this can be an example for other listed companies to follow. The initiatives we have supported to boost sustainable investment are detailed in our annual report.