Responsible sources in the Capital Markets Authority revealed to Al-Anbaa that the Kuwaiti capital market is not currently ready to list government sukuk, as it is not ready for that at the present time, and that the market system is currently working on a plan to list and trade sukuk within the development plan, which is expected to start during 2022.
The sources said that representatives of the Capital Markets Authority had stated during the meetings of the preparation of the governmental sukuk law that the mechanism for listing sukuk in the Kuwait Stock Exchange will be in accordance with the trading rules set by the Capital Markets Authority in coordination with the Minister of Finance and in accordance with the conditions contained in the sukuk subscription prospectus and in accordance with what is decided by the Fatwa and Sharia Supervisory Board.
According to the plan of the Kuwait Stock Exchange, among the mechanisms put forward to complete the stages of market development is the trading of minority rights, linking subscription to listings, trading of index funds, and a platform for trading bonds and sukuk, which in turn increases liquidity, adds flexibility to trading and improves the attractiveness of the Kuwaiti Stock Exchange. These new procedures facilitate the movement of funds and encourage operations Listing, as it ensures the completion of the capital increase for companies.
On the same level, the sources said that the Islamic Sukuk Law is considered an achievement, especially since Kuwait was one of the leading countries in this field and the region. The success of the experience of Islamic banks and the increase in demand for Islamic banking services that they provide is a major factor in the growth of this sector until it now represents 40% of the sector Kuwaiti banking.
She added: “The Sukuk Law is an important tool of monetary policy that provides options and alternatives that are compatible with the provisions of Islamic Sharia and that will develop and develop this important and vital sector.”
She said that the issuance of the law regulating government sukuk is appropriate for the current circumstances that Kuwait is going through, noting that most of the Gulf countries and others have a sukuk law, and they have preceded us in issuing similar laws.
The sources stated that the sukuk issuances in Kuwaiti dinars will be the source of their financing from the local market, which means absorbing liquidity in the market as much as the value of those issues, but on the other hand, spending the sukuk proceeds in light of the openness of the local market is transferred a large part of these funds abroad to finance the needs of goods and services imports, which is done through local banks that obtain the equivalent in foreign currencies to finance those needs from the Central Bank, which consequently entails reducing the foreign reserves of the Central Bank to the extent that has been transferred.
As for foreign currency issuances in the local market, they have an impact on monetary policy, with regard to the levels of liquidity in foreign currencies at local banks depending on the volume of issuance, as well as with regard to the appropriate return margin to maintain the competitiveness and attractiveness of the national currency as a vessel for local savings.