KUWAIT'S STOCK EXCHANGE EYES REGIONAL ROLE, FEMALE

UNCLAS SECTION 01 OF 02 KUWAIT 004552

SIPDIS

SIPDIS

STATE FOR NEA/ARPI SWALKER, LONDON FOR LTSOU

E.O. 12958: N/A
TAGS: PREL KFIN PINR KU
SUBJECT: KUWAIT'S STOCK EXCHANGE EYES REGIONAL ROLE, FEMALE
INVESTORS AND STRUCTURAL REFORM



1. (U) Summary. In an October 19 meeting with Econoff, the
Director of Public Relations at the Kuwaiti Stock Exchange
(KSE) applauded the increased number of Kuwaiti female
investors, expressed confidence in the continued rise of the
Kuwaiti stock market, and underscored the importance of
ensuring legal and structural reforms in order to enhance
market oversight and lead to the establishment of a Capital
Markets Authority (CMA) in Kuwait. End Summary


2. (U) Econoff met with Wafa Al-Rasheed, Director of Public
Relations at the Kuwaiti Stock Exchange (KSE) for an update
on KSE's latest developments. Al-Rasheed, a KSE official
since 1985, recalled that in 1983, a year after the 1982
market crash, the Kuwaiti government established the KSE to
restore order and confidence in the market. She commented
that the biggest challenge then was restoring the Kuwaiti
public's confidence in a shaken financial market and the
newly established KSE.


3. (U) She marveled at the market's unprecedented surge over
the last year as it nears the 11,000 point mark. (Note: The
market closed at 10,993 on October 23). She expressed
continued confidence in the market's strong performance,
noting that the health of the KSE mirrors the country's
booming economy in a post-Saddam era defined by increased oil
revenues and the long-term U.S. military presence as a hedge
against regional instability.

KSE Looking for a Regional Role
--------------


4. (U) Al-Rasheed pointed out that 12 percent of the KSE's
154 listed companies are non-Kuwaiti, primarily from the Gulf
and other Arab states and that KSE's efficiency and openness
are strengths that would help transform the organization into
a regional player, leaving the international market to the
newly launched Dubai international exchange. Al-Rasheed
added that KSE's only regional competitor, the Saudi
exchange, although seven times larger in trading volume, was
not as regulated and lacked KSE's market depth and
flexibility, leaving KSE in good position to dominate the
region.

Increased Kuwaiti Women Investors
--------------
.

5. (U) Al-Rasheed expressed enthusiasm with the rising number
of Kuwaiti women investors. She proudly points to having
established the Gulf's first trading floor for women, noting
that the number of female account holders has doubled to
approximately 32,000 since the trading floor's inauguration
in 2003. (Note: Econoff toured the women's facility and found
a modestly-sized yet busy and technologically advanced
facility overlooking the main trading floor.)


6. (U) As part of KSE's outreach efforts with women,
Al-Rasheed organizes quarterly investment workshops,
providing potential investors with informative CD-ROMs and
DVDs on the stock market in an effort to enhance the role of
women in Kuwait's bullish market. Al-Rasheed commented that
Kuwaiti women investors are "more prudent and better
informed" than their many of their male counterparts and, she
though, "less likely to panic" in the event of market
fluctuations.

Kuwait's Own SEC
--------------


7. (U) Al-Rasheed asserted that the KSE would continue to
enhance its effectiveness with planned legal and structural
reforms including the establishment of a Capital Markets
Authority (CMA) to serve as Kuwait's "Securities and Exchange
Commission." She explained that until June 2005, the Central
Bank of Kuwait functioned as the market regulator. That role
has since been transferred to the Kuwait Stock Exchange
Commission (KSEC),a KSE entity that will serve as the
structural basis for the CMA. According to Al-Rasheed, these
reform measures are long overdue and were spurred by a 2003
World Bank assessment recommending legal and structural
reform to strengthen regulatory oversight of the Kuwaiti
stock market and the establishment of a CMA.


8. (U) Al-Rasheed disclosed that KSE recently signed a
one-year contract with British International Securities
Consulting--a U.K. firm based in Hong Kong and comprised of
former London Stock Exchange executives--to transform the
Kuwaiti Stock Exchange Commission into an independent CMA.
She noted that perhaps 60 percent of the necessary CMA
infrastructure is already in place. She expressed cautious

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optimism about National Assembly approval of the proposed
reform measures, including recommendations to strengthen
punitive measures against insider trading, a problem she
considers to be prevalent in the country's small and
interdependent business community.

Bio Note
--------------


9. (U) Wafa Al-Rasheed joined KSE in 1983 after having been
recruited by its Chairman and today remains the
organization's longest-serving female executive. She is a
Kuwaiti citizen with a degree in French literature from Nice
University in France. She speaks English fluently, is
divorced with two children and travels abroad extensively,
having visited the majority of the world's stock exchanges.
She was recently nominated as a finalist for the Middle East
Partnership Initiative's (MEPI) 2006 U.S.-Middle East
Entrepreneurial Training (MEET) program.

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LEBARON