Al-Jazzaf: After the end of seasonal factors and regional tensions... will the stock market surge?
Najah Bilal
The Kuwait Stock Exchange shook off its usual seasonal stagnation, kicking off August trading with a green surge and notable gains across all its indices, driven by a relative easing of regional tensions and the high operational resilience demonstrated by listed companies in the face of surrounding pressures.
Sultan Al-Jazaf, a member of the Kuwait Economic Association, told "Al-Siyasah" that the current rise in indices reflects a state of "cautious confidence" beginning to permeate investment circles, while noting that these gains were primarily based on improved trader sentiment and reduced geopolitical fears, rather than an abundance of new cash flows.
Al-Jazaf clarified that the trading floor during early August witnessed significant activity in speculative liquidity and smart, intensive turnover between leading and operational stocks, which enabled the indices to withstand the summer lull. Major portfolios and investment institutions quickly seized this exceptional period to build proactive financial positions at attractive and enticing purchase prices.
Regarding the sharp volatility that characterized the stock market’s performance in late July, Al-Jazaf attributed this pullback to seasonal liquidity pressures resulting from the holiday slump and a temporary reluctance by some individuals, as well as the dominance of geopolitical anxieties and traders’ continuous anticipation of any sudden regional developments that could once again bring an atmosphere of caution and hedging to the forefront.
With regard to the impact of the banking sector, Al-Jazaf stressed that the profits of local banks represent the "backbone" and safety valve of the Kuwait Stock Exchange. The strength of their financial positions and strong operational profits help stabilize the main index and ensure market stability against shocks, while also enhancing the stock market’s attractiveness as a magnet for foreign portfolios and international institutions seeking safe havens with stable returns.
The economic analyst, Al-Jazaf, offered a set of recommendations to traders in the current phase, the most prominent of which include gradual accumulation by exploiting summer volatility to build financial positions in leading stocks, as well as focusing on operational stocks by directing the investment compass toward companies and banks with genuine profit growth in the first half of the year, while avoiding speculative paper stocks.
He emphasized the necessity of maintaining liquidity by keeping a cash portion to seize opportunities during any unexpected declines, alongside exercising caution against rapid spikes, as this requires avoiding rushing to buy at price peaks resulting from temporary speculative turnover.
In his fifth point, Al-Jazaf directed traders to strictly orient their investment compass toward leading company shares and banks that demonstrated strong and sustainable operational profits during the first half of the year, as these are capable of providing rewarding cash distributions and greater resilience against shocks.
Finally, as a sixth point, Al-Jazaf specifically urged speculators to strictly adhere to "stop-loss" levels.
