High hopes for Kuwait reforms lift its stock market

• Premier index outdoes Gulf rivals
• Draft debt law approved on Monday
• Trading in Kuwaiti stocks rises sharply

Kuwait’s stock market is the Gulf’s top performer this year as local and foreign investors bet that economic reforms and increased infrastructure spending will bolster corporate profits.

Investors seem more confident Kuwait will make good on its long-awaited plans following the suspension of parliament last May. Parliament and the government were often at loggerheads, derailing efforts to invigorate the country’s non-oil economy.

This week, the cabinet approved a draft debt law that will allow Kuwait to sell bonds internationally and so raise money to fund infrastructure and economic diversification programmes.

In January the finance minister revealed that about 370 projects with a combined value of $42 billion had been included in the country’s 2025-26 draft budget.

“Reforms, strong corporate earnings, increased deal activity in the energy and real estate sectors, positive investor sentiment amid a pick-up in non-oil economic activity and reform momentum have been supporting the market,” says MR Raghu, CEO of Kuwait’s Marmore Mena Intelligence.

Boursa Kuwait’s premier market index, which includes about 30 of the country’s largest listed companies, is up 7.3 percent this year to March 17, outperforming other Gulf benchmarks.

The Kuwait measure has retreated since hitting a three-year high in early March, but this reflects a global stock market sell-off “as investors move to safer asset classes given the threat to economic growth, especially in the US”, says Junaid Ansari, director of investment strategy and research at Kuwait’s Kamco Invest.

For comparison, the Dubai and Abu Dhabi indexes are near-flat in 2025, Saudi Arabia’s measure is down 1.4 percent and Qatar’s benchmark has lost 1.6 percent.

Foreign investors were net buyers of $304 million of Kuwaiti stocks in February, the biggest monthly total since late 2022, according to a report by consultancy Iridium.

More broadly, trading in Kuwaiti stocks has increased. Boursa Kuwait’s turnover was KWD14.8 billion ($48.5 billion) last year, up 40 percent from KWD10.7 billion in 2023. The number of shares changing hands rose 72 percent to 69 billion over the same period.

These increases “reflect the expected turnaround in the Kuwaiti economy”, says Ansari.

The country’s real GDP is expected to expand 3.3 percent this year, according to the International Monetary Fund. That compares with a 2.7 percent contraction last year caused by falling oil prices and crude production cuts.

Kuwaiti stocks are not expensive despite the rally. The bourse trades at a price-to-earnings ratio of 13.8, below Bahrain at 14.5, Saudi Arabia at 17.8 and Abu Dhabi at 20.5.

Dubai’s P/E ratio of 9.2 makes it the cheapest market in the Gulf by that metric, followed by Oman at 9.3 and Qatar at 11.5, according to estimates by Japanese investment bank Nomura.

“The market is well supported by reforms in the pipeline, including real estate, that are expected to have a positive impact on a broad set of sectors, including banking,” says Ansari.

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National Bank of Kuwait, the country’s largest lender by assets, is up 15 percent this year while shares in smaller rivals Burgan Bank and Warba Bank have increased by 28 and 17 percent respectively. Burgan and Warba are ranked fourth and eighth by assets, according to S&P Global Ratings.

These gains “reflect healthy profitability trends”, says Ansari, pointing out that higher net interest income and sizeable loan growth enabled the banking sector to grow annual net profit by about 8 percent in 2024.

The real estate, construction and trade sectors, as well as consumer borrowing, are propelling credit growth, according to Raghu.

As a Nomura report published on March 10 says: “In Kuwait hopeful stirrings of economic reforms have encouraged buying lately in a market that had been overlooked.”