Kuwait has defied conventional logic for some time. Despite oil hovering about US$120 a barrel for much of the year, the boost to many local companies has been slight and stocks have performed dismally.
Since the start of the year, the Kuwaiti stock exchange has had its worst sixth months since 1998, according to a recent research report from Global Investment House.
Political gridlock and chronic issues with investment companies have scared off investors for some time, and heavyweights such as National Bank of Kuwait and Kuwait Finance House have posted lower-than-expected earnings this month.
But could there be light at the end of the tunnel?
Standard & Poor's certainly thinks so, raising the country's rating to "AA" with a "stable" outlook. That puts it on the same footing as Abu Dhabi or Qatar. The credit rating agency points to the bulging coffers at the oil-rich state as a reason for optimism. "Kuwait's public finances remain exceptionally strong, and the general government budget has been recording surpluses at double-digit percentages of GDP for almost a decade," the agency said in its report.
"These strengths comfortably balance our assessment of Kuwait's rating weaknesses, which include an ineffective political set-up leading to sustained gridlock between the government and parliament, a strong dependence on hydrocarbons, slow progress thus far on structural reform, and a lack of transparency regarding government assets."
The immediate effect of the upgrade will be a boost to government bonds, but Kuwaiti companies will also benefit from lower costs of borrowing, said Mark Watts, the head of fixed income at the National Bank of Abu Dhabi.
However, bearish comments from Sheikh Salem Abdul Aziz Al Sabah, the central bank governor, may do little to reassure investors.
"One-sided" dependence on oil and the government's control of all sectors are causing "imbalances" for the country, he told CNBC Arabia on Tuesday.
"Without majorly improving the business environment, and urgent and quick capital spending, there will be no growth, and without giving the private sector a chance, the future outlook will be limited," he added.
Investors must be hoping the light at the end of the tunnel is not an oncoming train.
