Al-Zalzalah said that the cabinet’s finance and economy committee would make preparations for an independent authority to govern the bourse and that a draft law would be submitted to the cabinet within two months.

The KSE is currently overseen by the Central Bank of Kuwait but essentially regulates itself. ‘Setting up a stock exchange authority will greatly help the market, and the move generated positive sentiment among investors because of the promise of a body that they can trust in charge of the bourse,’ says Rasha al-Huneidi, senior financial analyst at the local Global Investment House.

During the mid-March slide, market-watchers widely called for such reform as opposed to the direct government intervention in the market demanded by investors.

The KSE rose on four out of five trading days during the first week of April. Volumes were also heavy, with 324 million shares changing hands on 5 April – the highest so far in 2006. The blue chips have generally been doing well as investors seek a safe haven in the storm.

The industrial sector is performing strongly, largely due to the buoyancy of National Industries Group stock. Also improving market conditions has been the injection of liquidity as investors begin collecting their annual dividends.

‘There are a lot of positives that should help the market wade forward,’ said Global in a recent market report. ‘For one, earnings for the market as a whole seem to be running well ahead of valuations. We believe the Kuwaiti bourse houses swathes of undervalued stocks and will continue to advance for the coming months.’

Before the slump, shares were reasonably priced and they are now even more so. The average price/earnings (PE) ratio stands at about 12. However, investors remain warier than a few months ago. ‘I think it will take a while before the really bullish trend returns,’ says Al-Huneidi.