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Will Kuwait ETF benefit from a reclassification by Standard & Poor’s?


HANetf, Europe’s first independent ‘white label’ UCITS ETF issuer expects tailwinds to remain strong in Kuwait following Standard & Poor’s decision to add Kuwait to its Global and Emerging Benchmark indices.

This is expected to generate an estimated $2 billion of passive inflows, helping to intensify investor appetite in the Gulf country.

Additionally, the MSCI is likely to confirm Kuwait’s upgrade to ‘Emerging’ in December 2019, resulting in a further $10 billion of passive and active flows expected in early 2020.

Strong economic fundamentals along with the change in classification are reflecting improvements in the Kuwaiti capital market infrastructure, operations and foreign investor accessibility, which have been implemented by the Kuwaiti Stock Exchange and local regulators. The country is currently in the middle of an extensive long-term economic diversification programme – “Vision 2035”, designed to encourage foreign investment and reduce dependency on oil revenues.

The KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) recently underwent its quarterly rebalance, with Burgan Bank and Kuwait Investment Projects Co added. Both securities passed the required liquidity screening to qualify for inclusion into the index. There were zero deletions to the index.

Hector McNeil, Co-CEO at HANetf, said: “Kuwait is truly a frontier market success story. Economic reform, diversification of the economy and massive investment has seen strong underlying fundamentals. The most recent upgrade by S&P will see further inflows into the local market quickly followed by the expected MSCI confirmation. Global investors have quickly adopted KUW8 as their preferred way to access Kuwait equities and it has been the fastest growing ETF on the HANetf platform year to date. Given KUW8 is the only such ETF in the World we expect significant future growth.”

The KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) was launched on the London Stock Exchange, Borsa Italiana and XETRA via the HANetf white-label platform in April 2019, with Kuwait & Middle East Financial Investment Company as sponsor.

Tracking the FTSE Kuwait All-Cap 15% Capped Index, the KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) enables investors to gain exposure to large, mid and small cap Kuwaiti equities, with high exposure to the capitalist elements of Kuwait’s economy.

Why trade Kuwait with an ETF?

  • Recent activity in Kuwaiti equities is creating a trading opportunity
  • Tailwinds remain strong with $2bn of passive inflows predicted in September following S&P’s decision to upgrade Kuwait
  • Kuwait’s economy benefitting from index reclassifications, economic diversification programme & capital markets improvements
  • World’s only pure-play Kuwait ETF, KUW8 rebalances with 2 new constituents added

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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