Yesterday the Kuwait SE price index reached its five year low of 6,328 points, closing lower than the January ’09 levels of 6,380 points. However, the weighted index was much more merciful as it is still above its one year low of 373 points. This is a classic example that shows how our price index is not a good indicator of our economy as most of the large caps didn’t fall as much and did not have the same fate as some of the small caps.
Below is a chart of the price and weighted index.
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Loading ...Tags: KSE, Kuwait Stock Exchange
My personal advise is don’t buy the falling knife. There is serious talk of a double-dip in the S&P 500. With Emerging Markets raising rates and the US at zero interest rates already, there isn’t much wind for the sails. Even if things collapse, I’d rather buy shares in US companies versus Kuwait.
As for the Price vs. Weighted indices, many of the companies adversely affecting the Price index should’ve gone bankrupt already!
It will be a tough 2nd half all over.
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Laocowboy2 Reply:
July 7th, 2010 at 10:15 am
You second para sums up the real problem perfectly. Unless and until all the dross is drummed out – and until the survivors have had to value the remaining assets realistically, it will be hard for the market to form a proper base (and almost impossible to entice fresh money back to the market).
The KSE suffers from being mainly a traders’ market (and I am using a kind word here as gambling is forbidden after all) and unfortunately lacks the firm core of longer term investors (pension funds, life insurance funds etc) that more mature markets enjoy. How the powers that be change this is however beyond me!
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