Kuwait’s stock market has lost almost a third of its value this year, despite a cash injection of $265bn from its sovereign wealth fund. It fears that the financial instability could deter foreign investors.
The stock exchange closed briefly in November after traders brought a legal case against the government and the exchange’s executives, demanding they intervene to support the market, but it reopened after the authorities appealed.
Kuwait controls about 10% of the world’s oil resources and has looked relatively insulated from the financial storm. But its second-biggest commercial bank, Gulf Bank, lost $1.4bn in a derivatives trade, forcing a bail-out by the central bank and a guarantee on all deposits in the country to prevent a bank run from spreading. Rating agency Moody’s has put the financial sector as “stable to negative” but is concerned about banks’ large exposure to real estate.