MIDEAST STOCKS-Kuwait hits 33-week low on Agility indictment

DUBAI Nov 17 (Reuters) - Shares in Kuwaiti logistics firm Agility (AGLT.KW) tumbled on Tuesday after a U.S. grand jury indictment, dragging Kuwait's bourse .KWSE to its largest one-day drop for 19 weeks as transparency concerns spurred selling.

Agility's indictment is the latest blow to a troubled Kuwait market, which slumped to its lowest close since March 31 after falling 2.9 percent and taking its losses to 12 percent in the past month. [ID:nN16518906]

Analysts say lack of corporate governance or even a market regulator is scaring away investors.

"There's a lot of talk about a lack of transparency and the Agility case is the latest in a series of events that have stopped the Kuwait market from having a chance to recover (from last year's 38 percent drop)," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.

"The market will have to do something to regain investors' trust."

Agility fell 8.3 percent to a 19-week low. According to U.S. prosecutors, Agility overcharged the U.S. Army by $60 million over a 41-month period and relate to contracts issued by the U.S. Department of Defense between 2003 and 2005.

Agility issued a statement on the Dubai bourse -- where it has a secondary listing -- the indictment was without merit, although the case meant it was barred from future contracts with the U.S. government until the matter was resolved. The indictment should have no impact on current contracts with the U.S. government, Agility added. [ID:nLH306278]

"(Companies) are taking advantage of the lack of transparency and regulation in Kuwait," said Talal al-Loghani, vice-president for Gulf equity markets at Kuwait Finance and Investment Co.

"There's no accountability on the Kuwait stock exchange. The standard in disclosure is at a minimum. It's very tough to give a view, analysts are hopeless now."

Agility's decline mirrors that of fellow heavyweight Zain (ZAIN.KW).

The telecoms operator dropped 5.9 percent on Tuesday to its lowest finish since May 28, with this latest decline taking its losses to 40 percent since Sept. 7, the day before major shareholder the Kharafi group announced it had agreed to sell a 46 percent stake in Zain to an Indian-led consortium.

More than two months on, there has been little further word from Zain or the Kharafi group, leaving investors to wonder whether the deal will be completed. [ID:nL726489]

In June, index compiler MSCI said it was no longer considering raising Kuwait's status because of market accessibility restrictions. [ID:nLG372544]

Kuwait's index is down 13 percent this year. In contrast, the Dubai .DFMGI and Saudi Arabia .TASI benchmarks have each added more than 30 percent.

(Additional reporting by Nicolas Parasie; Editing by Thomas Atkins)