Boursa Kuwait OTC platform demonstrated resilience and growth in 2023: Almowazi

Kuwait: A report released by Almowazi Financial and Economic Consulting Services Company highlighted that despite the global economic challenges indirectly affecting the Kuwaiti economy and local market, the Boursa Kuwait OTC platform for unlisted companies demonstrated resilience and growth for the year of 2023. This platform has emerged as a valuable opportunity and a fundamental source for investment and capital expansion.

Significant increase

The report noted that the number of companies engaging in real-time online (hybrid) trading has increased from 88 unlisted companies at the launch of the OTC platform in 2018 to 131 unlisted companies by the end of 2023. This growth can be attributed to regulatory changes implemented by the Capital Markets Authority in 2022, which mandated shareholding companies whose shares were delisted from Boursa Kuwait’s main market to transition to the OTC platform for real-time online trading.

It’s important to highlight that the total capital of companies registered for real-time online (hybrid) trading on the OTC platform experienced an annual growth rate surpassing 5 percent. This reflects the stability of trading performance on the OTC platform and underscores the growing confidence of investors in its effectiveness and significance. Conversely, companies adhering to Islamic sharia principles contributed significantly to this growth, accounting for 54 percent of the total number of participants on the platform, particularly between 2021 and 2023.

Business activity

In 2023, the OTC platform registered an impressive participation rate of 84 percent among its total companies, with 110 companies actively trading through the real-time online trading system over the year. Notably, companies compliant with Islamic sharia principles represented a significant portion of this activity, making up 49 percent of the total capital of companies operating on the OTC platform.

Trading volume

During 2023, the shares of 328 unlisted companies were traded via the OTC platform, where 3.28 billion shares were traded through 4,905 transactions, with a total value of KD 234 million. Holding companies, services and real estate sectors continued to dominate the platform’s activity, as they collectively contributed 76 percent of the total transactions, 88 percent in terms of total volume, and 94 percent in terms of total value.

Education sector

Last year, the education sector stood out in trading on the OTC platform, with four companies from this sector ranking among the largest traded in the real-time online trading system. This development highlights the strong interest from investors in the education sector and their pursuit of additional investment opportunities within this field.

Overview

The real-time online (hybrid) trading system offered by the OTC platform serves as an effective mechanism for private unlisted companies, family businesses, and startups seeking to raise capital. It also caters to investors searching for opportunities in unlisted companies that are anticipated to yield profitable returns. The OTC platform serves as a valuable tool for unlisted companies and those whose shares have been delisted from the main market (the stock exchange). It offers an effective mechanism that supports and facilitates investors in executing exit strategies while enabling companies to buy back their shares.