VZCZCXRO1635
RR RUEHDE RUEHDH RUEHDIR
DE RUEHKU #0336 0971354
ZNR UUUUU ZZH
R 071354Z APR 09
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC 3145
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS KUWAIT 000336 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ARP, EEB/IFD/OMA, EEB/EPPD 
TREASURY FOR INTERNATIONAL AFFAIRS 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ECON KU
SUBJECT: KUWAIT BOURSE SUSPENDS ALMOST ONE FIFTH OF TRADED FIRMS 
 
REF: KUWAIT 202 
KUWAIT 111 
KUWAIT 8 
 
¶1. (U) The Kuwait Stock Exchange (KSE) announced April 1 the 
suspension of 36 companies, including giants Global Investment House 
(GIH) and Investment Dar, for failing to file their 2008 financial 
results by March 31.  With 210 companies traded on the KSE (the 
second largest bourse in the Middle East), the affected companies 
account for 17% of Kuwait's publicly traded firms.  KSE officials 
state that the affected firms' shares will recommence trading once 
2008 results have been declared. 
 
¶2. (SBU) Post's sources indicate that two main factors account for 
the large number of firms failing to disclose their 2008 results on 
time.  First, some companies, in particular investment firms, 
suffered massive losses in 2008 and are reluctant to announce the 
magnitude of such losses.  Second, many publicly traded Kuwaiti 
companies' management teams are in protracted discussions - i.e., 
disagreement -- with their auditors regarding methodologies and 
standards for accounting for losses; many such discussions were not 
resolved prior to March 31. 
 
¶3. (SBU) Investment firm officials have told econoffs that 
relatively lax bourse regulation in Kuwait probably contributed to 
the high number of companies refusing to disclose their 2008 results 
in a timely fashion.  Kuwait's bourse is the only GCC exchange not 
governed by a regulatory agency, and filing requirements (for 
quarterly and annual financial results disclosure) fall short of 
international standards.  Local media reports in late March 
indicated that the Council of Ministers is considering promulgating 
a law establishing a stock market regulatory body via Amiri 
(emergency) decree in the coming weeks.  (Note: draft legislation to 
create such a regulator has been with the National Assembly since 
last year, having fallen prey to the ongoing tensions between the 
executive and legislative branches.  End note). 
 
¶4. (U) The KSE also announced April 2 that it may consider 
suspending other companies if they fail to pay dividends on time and 
if they fail to hold annual shareholder meetings.  The KSE did not 
name any companies who face such sanction. 
 
¶5. (U) In addition to the debt laden GIH and Dar Investment, other 
major firms affected by the suspension include: Al-Mal Investment 
Co., a firm controlled by Nasser Al-Kharafi, the brother of the 
Speaker of the National Assembly; Noor Financial Co.; Kuwaiti 
conglomerate National Industries Holding Group's investment arm; and 
Aayan Leasing and Investment Co. 
 
¶6. (SBU) Comment: Per Post's previous reporting, the KSE's sanctions 
against these 36 firms demonstrate the extent to which a relatively 
large number of Kuwaiti investment companies have been hit by the 
global financial crisis (reftels).  Companies' unwillingness to 
reveal their 2008 losses indicates that GIH and Dar Investment may 
not be the only large Kuwaiti investment firms threatened with 
near-term insolvency.  The KSE has enjoyed a rally of sorts since 
the announcement of the suspensions, though this may also be 
attributable to GCC-wide bourse rallies.  End comment. 
 
 
JONES