Investors and financial analysts in Kuwait are waiting to see who the government chooses to lead the country's new Capital Market Authority (CMA), now that Kuwait's parliament, the National Assembly, has passed the framework legislation for this long-awaited new supervisory agency.
Weak regulation is blamed for the price manipulation and lack of transparency that undermines local investors' confidence and deters foreign institutions from buying stock listed on the Kuwait Stock Exchange (KSE), one of the oldest bourses in the region.
The fragilities of what had seemed a well-resourced national investment sector were brutally exposed by the global crisis. Prices on the KSE suffered more than almost anywhere else in the Middle East, as trust in the core value of local assets slumped. Meanwhile, a number of leading investment houses in the country ran into serious financial problems as the world squeeze on liquidity eroded their access to the short-term funding, which they had relied on to support long-term projects.
These problems were in sharp contrast to the performance of Kuwait's banking sector which--with the exception of Gulf Bank, hit by specific internal flaws--weathered the global financial crisis with relative ease.
The sector was protected by the prudent lending constraints imposed by the Central Bank of Kuwait.
The painful experiences of the past 18 months gave renewed impetus to the longstanding plans for a new CMA to oversee the KSE and the whole investment sector in the country.
Reform proposals have often run into opposition in the National Assembly. But the election of an enlarged contingent of reformist members of parliament (MPs) in summer last year, …