Al-Jazzaf: The stock market held firm and managed to absorb the shock of tensions
Bank profits a strength factor and slight monthly declines on most indices
Najah Bilal
Current geopolitical tensions have cast a heavy shadow over the regional financial and investment landscape, as financial markets translate the volatility and heat of security conditions into immediate movements in trading desks. Amid hostile Iranian attacks targeting vital and civilian facilities in Kuwait, the stock exchange has come under close analytical scrutiny to gauge the depth of geopolitical impacts on investor confidence and capital flows.
"Al-Siyasa" monitored the impact of these strikes on the market, the most prominent of which was the surge in speculative and low-priced stocks, opening the door wide to a fundamental question: Why did rapid speculation intensify at a time when the country is facing exceptional hostile targeting?
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In this context, financial analyst and economic expert, and member of the Kuwait Economic Association, Sultan Al-Jazaf, told "Al-Siyasa" that the most significant economic impacts of these attacks on trading activity in the stock exchange revolved around several points. The first was pressure on main indices and a decline in liquidity. Waves of missile and drone strikes targeting vital and civilian facilities in Kuwait, such as energy installations and the area around Kuwait International Airport, pushed the market into a phase of extreme anticipation and caution.
He noted that this scenario drove investors toward caution and the liquidation of part of their financial positions, leading to slight declines and index fluctuations across multiple sessions, with daily liquidity levels dropping to range between 60 and 70 million Kuwaiti dinars.
Al-Jazaf mentioned that the second point centers on the redirection of liquidity toward leading and speculative stocks. Major investment portfolios concentrated their available liquidity in leading stocks with high financial solvency, such as "Bitek" shares and the banking sector, benefiting from quarterly profit announcements and half-year distributions that provided a certain level of support and prevented a sharp, collective market drop.
Regarding the third point, Al-Jazaf stated that it revolves around rising insurance and shipping costs and their sectoral impact. Military escalation and the closure of the Strait of Hormuz by Tehran, alongside the targeting of oil tankers in the waterway, led to a significant jump in global oil prices, marine insurance costs, and supply chain risks, which subsequently affected sectors listed on the stock exchange.
Al-Jazaf noted that certain sectors faced selling pressure, such as "Industry" and "Real Estate," due to fears of project slowdowns or rising costs of imported and operational materials. However, resilient sectors attracted others, such as "Basic Materials" and "Technology." It can be said that the Kuwait Stock Exchange partially succeeded in absorbing the direct shock thanks to financial defenses embodied in the strong profits of leading banks. However, the continuation of geopolitical uncertainty imposes cautious ceilings on the market's upward movement.
Al-Jazzaf added that although indicators recorded slight declines in some sessions due to a wait-and-see attitude during the month, the main market, on the other hand, witnessed notable activity and an injection of liquidity, particularly in speculative stocks. He attributed this to several technical and psychological factors, the most prominent being the low cost of acquisition and the rapidity of their price movements, at a time when geopolitical conditions demand caution. Moreover, the decline in the price value of speculative stocks allows individual traders and small portfolios to build large positions with limited liquidity. Furthermore, the rapid turnover and ability to realize profits provide opportunities for quick gains and swift exits within the same session or over a few days, which investors prefer during periods of political uncertainty.
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Al-Jazzaf pointed out that there are other reasons that contributed to increasing the flow of speculators’ funds into the main market. The most prominent among these is avoiding price stagnation in heavy stocks in the absence of market makers in major stocks. The temporary caution adopted by market makers and large portfolios in leading stocks has opened the door for individual liquidity to steer trading toward small-cap stocks. This is especially true given that small-cap stocks typically have fewer free-floating shares available for trading compared to billion-dollar companies, meaning that raising or lowering their prices requires less liquidity and minimal speculative effort.
