US embassy cable - 05KUWAIT4552

UNCLAS SECTION 01 OF 02 KUWAIT 004552 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ARPI SWALKER, LONDON FOR LTSOU 
 
E.O. 12958: N/A 
TAGS: PREL, KFIN, PINR, KU 
SUBJECT: KUWAIT'S STOCK EXCHANGE EYES REGIONAL ROLE, FEMALE 
INVESTORS AND STRUCTURAL REFORM 
 
 
1. (U) Summary.  In an October 19 meeting with Econoff, the 
Director of Public Relations at the Kuwaiti Stock Exchange 
(KSE) applauded the increased number of Kuwaiti female 
investors, expressed confidence in the continued rise of the 
Kuwaiti stock market, and underscored the importance of 
ensuring legal and structural reforms in order to enhance 
market oversight and lead to the establishment of a Capital 
Markets Authority (CMA) in Kuwait.  End Summary 
 
2. (U) Econoff met with Wafa Al-Rasheed, Director of Public 
Relations at the Kuwaiti Stock Exchange (KSE) for an update 
on KSE's latest developments.  Al-Rasheed, a KSE official 
since 1985, recalled that in 1983, a year after the 1982 
market crash, the Kuwaiti government established the KSE to 
restore order and confidence in the market.  She commented 
that the biggest challenge then was restoring the Kuwaiti 
public's confidence in a shaken financial market and the 
newly established KSE. 
 
3. (U) She marveled at the market's unprecedented surge over 
the last year as it nears the 11,000 point mark. (Note: The 
market closed at 10,993 on October 23).  She expressed 
continued confidence in the market's strong performance, 
noting that the health of the KSE mirrors the country's 
booming economy in a post-Saddam era defined by increased oil 
revenues and the long-term U.S. military presence as a hedge 
against regional instability. 
 
KSE Looking for a Regional Role 
------------------------------- 
 
4.  (U) Al-Rasheed pointed out that 12 percent of the KSE's 
154 listed companies are non-Kuwaiti, primarily from the Gulf 
and other Arab states and that KSE's efficiency and openness 
are strengths that would help transform the organization into 
a regional player, leaving the international market to the 
newly launched Dubai international exchange.  Al-Rasheed 
added that KSE's only regional competitor, the Saudi 
exchange, although seven times larger in trading volume, was 
not as regulated and lacked KSE's market depth and 
flexibility, leaving KSE in good position to dominate the 
region. 
 
Increased Kuwaiti Women Investors 
--------------------------------- 
. 
5. (U) Al-Rasheed expressed enthusiasm with the rising number 
of Kuwaiti women investors.  She proudly points to having 
established the Gulf's first trading floor for women, noting 
that the number of female account holders has doubled to 
approximately 32,000 since the trading floor's inauguration 
in 2003. (Note: Econoff toured the women's facility and found 
a modestly-sized yet busy and technologically advanced 
facility overlooking the main trading floor.) 
 
6. (U) As part of KSE's outreach efforts with women, 
Al-Rasheed organizes quarterly investment workshops, 
providing potential investors with informative CD-ROMs and 
DVDs on the stock market in an effort to enhance the role of 
women in Kuwait's bullish market.  Al-Rasheed commented that 
Kuwaiti women investors are "more prudent and better 
informed" than their many of their male counterparts and, she 
though, "less likely to panic" in the event of market 
fluctuations. 
 
Kuwait's Own SEC 
---------------- 
 
7.  (U) Al-Rasheed asserted that the KSE would continue to 
enhance its effectiveness with planned legal and structural 
reforms including the establishment of a Capital Markets 
Authority (CMA) to serve as Kuwait's "Securities and Exchange 
Commission."  She explained that until June 2005, the Central 
Bank of Kuwait functioned as the market regulator.  That role 
has since been transferred to the Kuwait Stock Exchange 
Commission (KSEC), a KSE entity that will serve as the 
structural basis for the CMA.  According to Al-Rasheed, these 
reform measures are long overdue and were spurred by a 2003 
World Bank assessment recommending legal and structural 
reform to strengthen regulatory oversight of the Kuwaiti 
stock market and the establishment of a CMA. 
 
8.  (U) Al-Rasheed disclosed that KSE recently signed a 
one-year contract with British International Securities 
Consulting--a U.K. firm based in Hong Kong and comprised of 
former London Stock Exchange executives--to transform the 
Kuwaiti Stock Exchange Commission into an independent CMA. 
She noted that perhaps 60 percent of the necessary CMA 
infrastructure is already in place.  She expressed cautious 
 
KUWAIT 00004552  002 OF 002 
 
 
optimism about National Assembly approval of the proposed 
reform measures, including recommendations to strengthen 
punitive measures against insider trading, a problem she 
considers to be prevalent in the country's small and 
interdependent business community. 
 
Bio Note 
-------- 
 
9.  (U) Wafa Al-Rasheed joined KSE in 1983 after having been 
recruited by its Chairman and today remains the 
organization's longest-serving female executive.  She is a 
Kuwaiti citizen with a degree in French literature from Nice 
University in France.  She speaks English fluently, is 
divorced with two children and travels abroad extensively, 
having visited the majority of the world's stock exchanges. 
She was recently nominated as a finalist for the Middle East 
Partnership Initiative's (MEPI) 2006 U.S.-Middle East 
Entrepreneurial Training (MEET) program. 
 
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LEBARON