Experts Call for Stock Auction Transparency in KSE

Kuwaiti economists have called for greater transparency for auctioning held at Kuwait Stock Exchange (KSE) on stakes of listed companies for allowing more investors to take part in the bidding, namely Arab and foreign traders, thus serving the higher goal of transforming Kuwait into a business hub. The economic experts, interviewed by KUNA, forecast mounting number of such auctions, within the foreseeable future, with anticipation of suspending a number of the KSE-listed companies due to their failure of restructuring their status, a condition that may warrant either liquidation of the establishment, disposing shares or searching for a strategic investor to make it up for share-holders.
Shedding light on some of techniques involved in stock auctioning, Maitham Al-Shakhes said the holding of such bidding could be either in coordination with a party that desires to sell shares in a company and another that seeks to buy stakes, or upon a judicial rule.
In such an auction, prices of floated shares are higher than those promoted in the conventional market, warning that stock value might drastically fall in case it was sold for a price lower than that of the market price.
Some of the main objectives of these actions is settling corporate debts, or arranging a short or long term transaction for acquiring a stake.
For his part, Mohammad Al-Hajeri said such auctions are, usually held, upon desire of owners of a company, with the aim of luring an investor to buy a share, or for implementing a resolution by the judiciary.
Al-Hajeri affirmed that the basis of auctioning is publicity and transparency, hinting that illicit deals have been struck ahead of holding the public sessions. Negotiations should be public to “serve the market rights and inform all the investors who desire to be involved in the transaction,” he stressed.
Another prominent Kuwaiti expert, Adnan Al-Dulaimi, concurred that holding secret deals, ahead of the actual auctioning, renders it null and void. He also protested that no ample time has been given to prospected bidders to prepare themselves for the bidding.
Current mechanisms include very hard terms for the investors, and that is rendered more complicated with the behind-the-curtain deals between sellers and buyers.
Advertisements should be made ahead of time, and shares should be displayed for the largest number possible of people, for sake of justice, thus “we call for greater transparency and altering the current status particularly the duration set between start of publicity and holding of the auction,” he stressed.