Decline in the willingness of state institutions to contribute to the capital
In the last six months, we have not seen a demand for licenses to establish new investment funds, but rather the matter is limited to the renewal of previously granted licenses.
Despite the recent amendments made by the Capital Markets Authority to the provisions of Book 13 “Collective Investment Regulations” of the executive regulations law books No. 7 of 2010, to keep up with global developments in this regard, the most important of which is to reduce the minimum capital of investment funds to two million dinars, that Over the past six months we have not seen a demand for licenses to create new investment funds does not establish The matter is rather limited to the renewal of previously granted licenses or the acquisition of licenses for new entities outside the local market.
Investment sources told Al-Jarida that the new incorporation activity throughout the year did not exceed the fingers of one hand over the past years. In some years, the number of new foundations did not exceed the number “one”.
The sources believe that there is a reluctance among investment companies to establish investment funds specialized in investing in shares in the Kuwait Stock Exchange, and note that the current trend is to rely on existing funds and maximize their investments and income on a way that benefits the owners of their units.
The sources attributed the reasons for the non-establishment of new investment funds to the decrease in the desire of government institutions and bodies to contribute capital as was the case in the previous approach, as the General Authority for Investment and Social Security is a contributed part of the capital of this. funds, which helped in the success of these subscriptions.
The sources said that the current trend of investment entities, whether government or investment, is to look for new collective investment systems such as exchange traded funds, hedge funds, fixed income funds, venture capital and others related to the environment or specialized in certain sectors such as pharmaceuticals or technology, or communications.
The sources pointed out that despite all the achievements achieved in terms of privatization of the stock exchange and the radical change that took place in the trading systems, and its promotion to the ranks of emerging markets on three global indices, namely Morgan Stanley, Standard & Poor’s, and FTSE Russell, it still suffers from a deficit in The demand for investment financial instruments, which aims to increase liquidity and attract more foreign capital.
The sources indicated that the current period sees an increase in global demand for guaranteed or relatively low-risk investment vessels due to the confusion of conditions due to the repercussions of the current global crises, and the market does not have a demand to the establishment of new investment funds or any alternative instruments, other than investment portfolios, which rose by a percentage of 16 percent during the first quarter of this year.
The officials of asset management companies and investment funds agreed on the market’s need for new investment instruments from traditional investment funds, amid the fluctuating trading volumes in the stock market, and the fear that dominates individuals’ transactions within the market due to the confusion of political conditions of from time to time or as a result of crises in other global markets.
The sources confirmed that there is a tendency at the Kuwait Capital Markets Authority and the financial authorities in the Gulf Cooperation Council countries to reduce the fees for marketing and establishment of investment funds in countries other than those in which the funds were established. -listing of investment funds, by setting minimum conditions for the listing process.
She pointed out that opening the way for the listing of investment funds will allow investors to diversify investment opportunities, especially in sectors that may not be available in markets and available in other markets, as it will increase the investor base and companies promote. investments and products, in addition to increasing financial instruments, which increase rates Trading commissions, and this is reflected in the profits of all parties involved in the stock market, or the government, the stock exchange, brokerage firms, the Kuwait Clearing Company, and investors.
The sources praised the efforts made to establish the final legislative controls and frameworks for the establishment of hedge funds and venture capital funds, but on the other hand, the working system of these funds mainly depends on the instruments that serve their basic financial system . derivatives, futures and swaps, and preparing the infrastructure for them pave the way The success of the operating system.
She pointed out that the period required to move to the actual launch stage for the financial derivatives market to enter the Kuwait Stock Exchange to the stage of actual application is a period of no less than 2024, while the financial market needs stimuli that support and develop performance levels at all levels.
She pointed out that several problems face the establishment of investment funds, including fluctuations in trading volumes on the stock exchange, poor liquidity and the high level of fears among investors during the market downturn, in addition to the dependence of individuals mainly on managing their money themselves or through investment portfolios.
It is noteworthy that despite the approval of the regulatory frameworks for the establishment of income-generating real estate funds (REITs), the market has not seen the inclusion or establishment of such funds, with the exception of one fund called the KFH Capital Fund, which reflecting the decline in demand for these tools.
The sources demanded that the Capital Markets Authority evaluate the investment instruments introduced in the market after a period of approval to see if they meet the market’s aspirations or need adjustments to keep pace with the local market.