Strong initial public offering (IPO) activity at home and abroad has been suppressing trading volumes on the local bourse, causing investors either to hold back liquidity or to invest their surplus funds elsewhere in the GCC. 'On the one hand, the IPOs of Al-Mahain Oman and especially of Amlak Financein the UAE have diverted attention away from the KSE,' says Shailesh Dash, head of research at the local Global Investment House. 'On the other, Kuwaiti investors are also holding back liquidity ahead of the planned IPO of the local Bubiyan Bank.' Bubiyan, the new Islamic bank being established by the state-owned Kuwait Investment Authority, is to be capitalised at KD 100 million ($345 million), with 76 per cent of shares offered to local investors.

The banking sector as a whole has been trading strongly, as local financial houses report strong full-year profits. The highest March trading volumes were in the shares of Burgan Bank, which recently announced both a new management team and a return to profitability, and in those of Kuwait Real Estate Bank, which was granted an Islamic banking licence in late March.

The fortunes of the two local telecoms providers, whose aggressive expansions have caused stock values to soar over the past year, diverged at the beginning of April. The share price of Mobile Telecommunications Companycontinued to rise, up by 1.1 per cent in the first week of April, on strong 2003 profits growth, the award of a mobile network management contract in Lebanon and news of prequalification for Saudi Arabia's second GSM licence. But the stock of Wataniya Telecomslipped by 5.3 per cent over the same period. 'Wataniya needs cash for its expansion, so went for two rights issues instead of a dividend in 2003, diluting the shareholding base,' says Dash.

The most-traded stock in early April was that of Kuwait Projects Company (Kipco), which has recently hit the headlines with the sale of its stake in Bank of Kuwait & the Middle Eastin return for an increase in Kipco's stake in Wataniya. Al-Mal Kuwaiti Companyshares were the second most heavily traded among local stocks, rising 3.5 per cent in the week to 7 April. The rise coincided with news that an Al-Mal-led group had been awarded a contract to develop a coke calcination plant at Shuaiba.

Looking ahead, the heightened private equity activity makes the investment sector a continued good bet. 'Among individual stocks, Public Warehousing Companystands out,' says Dash. 'The company has a real, coherent business plan and has transformed itself from a warehousing to a full logistics firm over a short period of time while expanding swiftly throughout the region.'

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