State urged to take action
KUWAIT: The chairman of companies
whose share price has declined recently has explained that the losses incurred
by those companies are on the rise due to downward movement of the market. He
said: "It is a very worrying matter and disturbs the chairmen of many
companies." He pointed out that things are going to the worse unless government
takes action to stop decline in the market. He explained that share prices have
reached a very low point.
Duh! What a brainfart. Automatically, you have given proof that you are not fit to chair a company, along with your Chairman buddies... (please let me know who you are so I know not to invest in your company!... I hope it's not my employer!!).
Prices of company stocks in Kuwait, as in the rest of the Gulf were getting way out of kilter with fundamentals, as they are wont to do when easy money can be made and investors get greedy, ie. if I buy at 'x' price, it will continue going up so I can sell and make a nice handy profit, as there's always another sucker who will come in and buy when the price has gone up. As with all speculative stockmarket bubbles, eventually they pop! Stockmarket investing lesson 101.
How exactly is a reduced share price affecting your core business? Or is it that you've lost money investing in shares? And now you want the State to action... please. Next you'll want the head of the KSE! (Oh, that's already on the agenda!)
2 comments:
Kiwi Nomad said..
"Prices of company stocks in Kuwait, as in the rest of the Gulf were getting way out of kilter with fundamentals"
How do you define this? At its climax, the average KSE market PE was never higher than 17, which was way lower than the market averages in KSA, UAE, or Qatar. Of course, the PE is even lower now.
"How exactly is a reduced share price affecting your core business? Or is it that you've lost money investing in shares?"
That's exactly the case. With a surplus of cash last year, these companies got in on the market frenzy. When the market crashed, the devalued shares hit their 1st Qtr earnings hard.
"And now you want the State to action... please."
Heh, this laughable notion is ingrained in the mindset of Kuwaities living in a welfare state. When the going gets rough, they use the State as a crutch. Of course, you didn't hear calls for state intervention when the market index was sky rocketing.
I agree Kuwait stockmarket was most accounts less inflated than other Gulf markets. Of course even an average PE of 17 may be considered high given the risks associated with this market, the lack of transparency and other factors...
A welfare state seems to be here to stay until the oil runs out...
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