Kuwait stocks fall amid turmoil

Kuwait's stock market fell sharply yesterday as investors dumped stocks ahead of a major political protest called in reaction to changes to election laws.

Kuwait's stock market fell sharply yesterday as investors dumped stocks ahead of a political protest called for later in the day in reaction to changes to election laws.

The emir of Kuwait, Sabah Al Ahmad Al Jaber Al Sabah, ordered amendments to the electoral system last week that would change the way people vote. Under the current system Kuwaitis vote for as many as four candidates in a parliamentary election. The amendments would reduce the number to one.

The country's opposition was unhappy about the change, believing the government was trying to manipulate process, and threatened to boycott elections on December 1.

The Kuwait Stock Exchange Price Index sank 3 per cent in response to the expected protest, the biggest one-day price drop since July 2009, to close at 5,731.31 points.

For every stock that rose, nearly seven declined.

"The sell-off shows a degree of disbelief and lack of confidence and concern from investors that political developments are clearly taking centre stage and not good for the economy," said Haissam Arabi, the chief executive at Gulfmena Investments.

The Dubai-based asset management firm shed holdings in Kuwaiti companies more than a year ago after political turmoil in the Arabian Gulf state surfaced.

"Foreign investors typically follow a top-down approach, looking first at the political level, then fiscal and currency level, before going down to picking stocks," Mr Arabi said.

"Given the uncertainties we have opted to stay out of Kuwait for the last year."

Agility, the storage and logistics provider, fell 5 per cent to 0.47 Kuwaiti dinar. International Financial Advisors dropped 7.6 per cent to 0.036 dinar. Al Mal Investment Company declined 7.8 per cent to 0.035 dinar.

Kuwait's market is the second biggest in the region in terms of traded value, with more than 215 stocks listed.

"We expect the Kuwait Stock Exchange to remain weak until a route out of the mire is eventually identified," said Julian Bruce, EFG-Hermes's Dubai-based director of institutional sales trading, in a statement.

Tension has been steadily rising in Kuwait since last December when the emir dissolved parliament amid corruption allegations.

Fresh elections were held in February and Islamist opposition members won the most seats. In June, the constitutional court again dissolved parliament, ruling the election had been illegal. Parliament was again dissolved on October 7.

Kuwait has had eight governments over six years.