Halal Investment: List of Shariah Compliant Stocks in Kuwait
Shariah Compliant Stocks in Kuwait
Today, we bring to you yet another interesting geographical facts about the stocks and investment options that are in accordance with the Shariah laws. We will be covering the shariah compliant stocks and its details for the country of Kuwait in this blog today and will focus on how Kuwait is important with respect to the HALAL Stocks.
About Boursa Kuwait
Well, the stock market in Kuwait is also pretty strong. It is renamed as the Boursa Kuwait in 2016. We will discuss more about it in the coming sections.
Prior to the creation of the Kuwait Stock Exchange, there were many shareholding companies in the Kuwait market. However, in April 1977, the stock exchange was initiated and got its name as the Kuwait Stock Exchange in the year 1983. Later on, in 2016, it was renamed as the Boursa Kuwait.
Major industries in Kuwait are construction, shipping, cement, water desalination, construction materials and financial services.
The stock market is regulated mainly by four bodies – the Ministry of finance, the KSE, the Central bank of Kuwait and the Ministry of commerce and industry. The Boursa Kuwait is also one of the largest stock exchanges in the Persian Gulf region. There are a total of 174 stocks listed on the stock exchange.
Stocks listed on Boursa Kuwait are divided into three markets;
1. Premium Market:
This is the prime segment for companies to get listed in this segment. It lists those stocks that have high liquidity and medium to large capitalization.
Companies qualified for this segment are regularly reviewed throughout the year to know whether they maintain the terms and conditions laid down by the authority.
Kuwaiti Companies to be part of premier Market need to follow the below;
⦁ Need to complete the listing of 2 years.
⦁ Need to maintain the required market cap.
⦁ Need to maintain the required liquidity level.
⦁ Need to maintain the average prices.
⦁ The operation of the company must have completed seven years.
The obligations for premier stocks are following
⦁ Average market cap needs to be maintained.
⦁ Daily traded value needs to be maintained.
⦁ Average price needs to be maintained.
⦁ Quarterly meeting for Analysts within 5 days of quarter report or annual report disclosed.
⦁ Frequent Violations need to be avoided.
⦁ All announcements in Arabic Language as well as in English language need to be published.
19 stocks of 174 listed stocks have qualified these criteria and they are now part of Premier Market. If the company listed on this market violates these rules frequently and fails to maintain the required criteria that stock will be degraded to the main market. If further violation happens, this will be degraded to the Auction market. To be part of the premier market again for the same company, it needs to fulfill the eligibility criteria and then it can be part of the premier market again. For more information, please read this
2. Main Market
The main market plays a vital role among all the markets. The major stocks of Boursa Kuwait are the part of the main market. Companies that are not fulfilling the criteria of the premier market get listed on the main market but these companies need to have enough and sufficient liquidity as required by the Kuwait Stock Exchange. The difference between the main market and premier market is only different fees and requirements but the trading rules are the same. 143 stocks out of 174 stocks are on the main market.
3. Auction Market
Companies that are not qualified for the premier market as well as the main market are listed on the Auction Market. These companies have low liquidity and low traded value. These stocks are annually reviewed and upgraded if they are found eligible either for the main market or premier market. This review is ongoing process that happens once in a year.
This market has the lowest companies listed. It has only 12 stocks listed.
In brief, the premier market got 19 stocks listed. The main market got 143 stocks listed and the Auction market got 12 stocks listed.
About Shariah Compliant Stocks in Kuwait
The Islamic Financial Services (IFS) industry is one of the fastest growing segments in Kuwait’s finance sector and sees a continuous rise in the number of shariah-compliant stocks, banks and insurance companies. According to the latest reports, Kuwait has a whopping 5.9 percent of the global Islamic banking assets and stands as the fifth largest Shariah-compliant banking industry in the world.
Number Of Shariah Compliant Stocks in Kuwait
Bursa Kuwait gets 174 stocks listed including Premier Market, Main Market and Auction Market. 84 stocks out of 174 stocks are considered to be Shariah Compliant.
Here in the graph, we can see 49% stocks are shariah compliant and we can expect more in the coming years since the trend of companies to become Shariah Compliant is on rise. Let us see the Shariah Complaint Stocks listed on the Premier Market, Main Market and the Auction Market each in the below graph.
Shariah Compliant Brokerage Firms in Kuwait
Unfortunately, only 1 brokerage company is Kuwait deals in only Shariah Compliant stocks exclusively out of the 10 licensed brokerage firms in Kuwait. Please see the table below: