Abstract
<p>This paper aims at finding the effective factors that influence three sectors in Kuwait stock exchange market (KSE) in addition to the whole stock market. The three sectors are banking, real estate and insurance sectors. The paper measures KSE performance through the average share prices calculated on a quarterly basis starting from 2005 until first quarter of 2015. It is found that each sector behaves differently towards macroeconomic variables. The most important determinants for the KSE overall market performance were found to be gold price and the deposits rate. Individually, the banking sector is influenced by consumer price index, interest rate on loans, oil price and gold price. The insurance sector is influenced by money supply, residential real estate price and oil price. The real estate sector is influenced by the exchange rate with respect to US dollars, interest rate on loans, oil price and gold price.</p>
Highlights
Informal stock trading was first introduced into Kuwait in 1952 with the establishment of the first shareholding company at that year in which the Kuwait National Bank was established
The banking sector is influenced by consumer price index, interest rate on loans, oil price and gold price
The real estate sector is influenced by the exchange rate with respect to US dollars, interest rate on loans, oil price and gold price
Summary
Informal stock trading was first introduced into Kuwait in 1952 with the establishment of the first shareholding company at that year in which the Kuwait National Bank was established. All along three decades afterwards, the government of Kuwait had issued a number of laws to regulate the emerging stock market industry and it wasn’t until the third quarter of 1983 that Kuwait Stock Exchange market (KSE) was founded and became the regulator and the umbrella for the stock market. In the first quarter of 2010, the regulatory responsibilities of KSE were transferred to a newly established authority at that time namely Capital Market Authority (CMA) whose mission was to create an investment environment in the stock market that is transparent and competitive so as to attract local and foreign investors. Kuwait stock market currently consists of fourteen sectors, each with a specific activity such as investment or instruments or financial Services. Its worth to mention that common stock is still the only type of stocks traded in the market and short selling is prohibited (Aldaihani, 2008)
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