Kuwaiti Traders Expect Quick and Profitable War

KUWAIT CITY, 19 March 2003 — Share traders in Kuwait bid up their country’s stock market yesterday amid predictions that the imminent US-led war on northern neighbor Iraq would be short and sharp, and eventually bring in big commercial opportunities. The main index closed at 2,759 points, a one percent rise over Monday and in high territory not seen in over five years. The index is rapidly closing in on the all-time record high of 2,836.8 points.

“It just means that we trust that this will be a very fast operation,” commented one trader, Mohammad Al-Ali.

The market rose on prospects that a US occupation of Iraq would bring about new deals for Kuwaiti companies, particularly those involved in the construction and energy sectors, he said. The market has also been encouraged by the general global upturn in stocks as investors bought up out of relief that a timetable for the conflict was now known and on the belief that US forces would quickly take control of Iraq.

Hot shares over the last couple of days have been the Kuwaiti National Bank and the Sultan Center, a retail chain that has been selling a lot of equipment to the more than 150,000 US and British troops deployed in Kuwait. Many of the Kuwaiti traders sitting around the modern bourse in their traditional Arab dress said trading would likely be suspended for a short time when the war begins.

“When war starts, they will close the market until the prices stabilize and we get an idea of the direction it is taking,” said another trader.

Meanwhile, the price of Kuwaiti crude last month surged above $30 a barrel over threats of a US-led war on Iraq, the emirate’s largest bank said yesterday. “Geopolitical developments have pushed the price of Kuwait export crude above $30 a barrel since mid February, putting it almost 40 percent above its lows in November 2002,” the National Bank of Kuwait (NBK) said in a report. The increase in prices since December “was fueled initially by disruptions in Venezuelan oil exports, but gained added momentum on rising concerns over the inevitability of war in Iraq,” it said. The bank also expects Kuwaiti crude to average $26 during the current fiscal year, boosting an expected budget surplus.

“Budget revenues that totaled five billion dinars ($16.5 billion) over the first ten months of the fiscal year could top six billion dinars ($19.8 billion) by end March,” which could be a record, it said. Kuwait’s 2002-2003 budget projects a deficit of $6.2 billion. Expenditure was forecast at $17.9 billion and revenues at $11.67 billion. Oil income was projected at $9.8 billion. By law, 10 percent of revenues, in this case $1.16 billion, is deducted for the Kuwait Fund for Future Generations, a $60 billion investment managed by the Kuwait Investment Authority.