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.
Top 5 Companies In Kuwait By Market Capitalization And Their Shariah Compliance Status
| Company | Market Cap (KWD) | Shariah Compliance | Compliance Risk Factor |
| Kuwait Finance House KSCP | 12.23B | Compliant | Not Likely to Turn Not Compliant |
| National Bank of Kuwait SAKP | 7.27B | Not Compliant | Not Likely to Turn Compliant |
| Boubyan Bank KSCP | 2.42B | Compliant | Not Likely to Turn Not Compliant |
| Gulf Bank KSCP | 1.17B | Not Compliant | Not Likely to Turn Compliant |
| Mabanee Company KPSC | 1.15B | Compliant | Not Likely to Turn Not Compliant |
Shariah Compliant Stocks In Kuwait – Sector Wise
| Sector | Compliant | Non-Compliant | Total |
| Financial | 22 | 31 | 53 |
| Services | 35 | 19 | 54 |
| Transportation | 2 | 3 | 5 |
| Capital Goods | 8 | 8 | 16 |
| Technology | 2 | 1 | 3 |
| Basic Materials | 4 | 1 | 5 |
| Consumer/Non-Cyclical | 2 | 2 | 4 |
| Utilities | 0 | 1 | 1 |
| Healthcare | 2 | 1 | 3 |
| Energy | 3 | 3 | 6 |
| Recreational Activities | 1 | 0 | 1 |
| Grand Total | 81 | 70 | 151 |
Number Of Shariah Compliant Stocks In Kuwait
Bursa Kuwait gets 151 stocks listed including Premier Market, Main Market and Auction Market. 81 stocks out of 151 stocks are considered to be Shariah Compliant.
Stocks Listed On Boursa Kuwait Are Divided Into Three Markets
Market Wise Number of Listed Stocks on Boursa Kuwait as on 22nd January 2020
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.
12 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. 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 12 stocks listed. The main market got 143 stocks listed and the Auction market got 19 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.
Market wise number of Shariah Compliant (Halal) Stocks on Boursa kuwait as of 22nd January 2020
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:
| S.L. | Name of Brokerage Firms | Status |
|---|---|---|
| 1 | KFH Financial Brokerage Company | Shariah Compliant |
| 2 | Al-Tijari Financial Brokerage Company | Conventional |
| 3 | EFG-Hermes IFA Brokerage | Conventional |
| 4 | Al-Sharq Financial Brokerage Co | Conventional |
| 5 | First Securities Brokerage Company K.S.C.C. | Conventional |
| 6 | Middle East Financial Brokerage Co | Conventional |
| 7 | K.I.C Financial Brokerage Co. | Conventional |
| 8 | KFIC Financial Brokerage Co | Conventional |
| 9 | Watani Financial Brokerage Co | Conventional |
| 10 | Al-Waseet Financial Business.(k.s.c) closed | Conventional |
Is Islamic Capital Market In Kuwait Regulated?
Yes. The Islamic banking and finance industry and the capital industry are very thoroughly regulated by the Capital Markets Authority (CMA) and the Central Bank of Kuwait. The Shariah banks are regulated under Law number 30 of 2003. The Number of fund managers who are making their funds is based on halal Stocks.
Number Of Banks In Kuwait Vs Number Of Islamic Banks In Kuwait
% of Conventional vs Islamic Banks in Kuwait
There are 12 banks in Kuwait and 6 of them are considered to be Islamic Banks as shown below:
| S.L. | Name of Brokerage Firms | Status |
|---|---|---|
| 1 | KUWAIT INTERNATIONAL BANK | Shariah Compliant |
| 2 | BOUBYAN BANK | Shariah Compliant |
| 3 | ITHMAAR HOLDING B.S.C. | Shariah Compliant |
| 4 | AHLI UNITED BANK – ALMUTAHE | Shariah Compliant |
| 5 | KUWAIT FINANCE HOUSE | Shariah Compliant |
| 6 | WARBA BANK KSCP | Shariah Compliant |
| 7 | NATIONAL BANK OF KUWAIT SAKP | Conventional |
| 8 | GULF BANK KSC | Conventional |
| 9 | COMMERCIAL BANK OF KUWAIT KPSC | Conventional |
| 10 | AL AHLI BANK OF KUWAIT KSCP | Conventional |
| 11 | BURGAN BANK KPSC | Conventional |
| 12 | AHLI UNITED BANK B.S.C | Conventional |
What Is The Perception Of The People Whether They Need To Invest In Shariah Based Stocks Or Conventional Stocks?
Slowly, there has been a growth in the people’s awareness towards investing in halal stocks. They are understanding the significance of following the Islamic law to the truest possible level. That is why, there has been a significant rise in the demand for Shariah based Stocks and investment options in the recent times. More and more institutions and fund managers are also trying to get their funds to be Shariah Compliant to meet the growing needs. Let us also know a bit about Kuwait.
About Kuwait
Kuwait is one of the prominent Islamic countries and part of Gulf Cooperation Council (GCC). The official name of this country is “State of Kuwait” Majority of the population is Muslims and follow Islam and the Official language is Arabic.
As per WikiPedia Population of Kuwait according to Nationality
Kuwait is also known as a Western Asian country that shares its borders with the countries of Saudi Arabia and Iraq. The most interesting thing to note about this country is that the total population of the country is 4.27 million and about 70 percent of its population comprises of expatriates and the rest 30 percent are Kuwaitis. Constitutionally, it is a sovereign state with a political system that is semi-democratic. The country is blessed with a high income economy, with the world’s sixth largest oil reserves. The currency, Kuwaiti dinar is the highest valued currency in the world. Now, that is something that interests us all.
How Can Islamicly App Help You Find Out Halal Stocks?
On Islamicly, you can find almost all the information related to Shariah compliant stocks and other investment instruments from any stock exchange around the world. If you are interested in knowing about whether any particular stock is in accordance to Shariah Principles, our app helps you with that information. Not only this, on Islamicly, you can create portfolios, can see the prices and can express your opinions about any stock on Forum as well! Keep coming to this space for more informative blogs and articles. Make your comments and let us know what do you feel about this blog and let us know if you want us to write on any particular topics.
