Kuwait bankers urge $12.8 bln stock bailout fund
KUWAIT (Reuters) - Kuwait's top banking lobby urged the government to buy up to 10 percent of the shares in its leading share index .KWSE through a bailout fund, in a move worth $12.83 billion, a top banker said on Wednesday.
The move comes a day after Kuwait asked its sovereign wealth fund, Kuwait Investment Authority (KIA), to set up a fund to invest in the battered bourse and shore up confidence. [nLI570210]
"It's one of the proposals made by the banking association," Abdulmajeed al-Shatti, head of the Commercial Bank of Kuwait (CBKK.KW) and the Kuwaiti Banking Association, said by phone.
Kuwait did not officially reveal the size of the fund, but a government source told Reuters earlier on Wednesday the newly proposed five-year fund would be worth at least 1 billion dinars ($3.68 billion).
"The KIA is putting the structure of the fund (together), the exact size is not decided upon yet. They will target good stocks; blue chip and stocks with dividend," said the source.
KIA plans to set up the long-term investment portfolio in cooperation with other government institutions, to invest in the Kuwait stock exchange.
The move aims to support the economy, contain the impact of the global financial crisis and boost confidence in the local market, the second-largest Arab bourse, which has fallen more than 30 percent this year, the cabinet added.
Last month, KIA, which manages Kuwait's oil-generated assets of at least 72 billion dinars ($265 billion), increased its investments in eight stock funds on the local bourse to support the market.
KIA is a major shareholder in many Kuwaiti companies including market heavyweight Mobile Telecommunications Co (ZAIN.KW).
The bourse halted trading on Thursday due to a court order won by investors seeking emergency measures by the government to protect their holdings and prevent further declines on the sagging bourse.
Trading resumed on Monday after the government won an appeal against the court ruling.
(Reporting by Rania El Gamal; Editing by Thomas Atkins and Simon Jessop)
