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KUW8 completes rebalance ahead of inclusion in MSCI Emerging Markets Index


The KMEFIC FTSE Kuwait Equity ETF (KUW8) underwent its quarterly re-balance on 19 March 2020, resulting in one addition and one deletion.KUW8 was issued via the HANetf white-label ETF platform with KMEFIC (Kuwait & Middle East Financial Investment Company) as main sponsor and advisor. KMEFIC is a provider of asset management, brokerage and wealth management services headquartered in Kuwait.

Tracking the FTSE Kuwait All-Cap 15 per cent Capped Index, the KMEFIC FTSE Kuwait Equity UCITS ETF enables investors to gain exposure to 17 Kuwaiti companies with a combined market capitalisation of ~USD28.1 billion. Rebalances occur quarterly at which constituents are capped at 15 per cent to reduce concentration in larger-cap securities. Having 17 companies represented in the index makes it the most diversified Kuwaiti ETF available globally. The ETF has a TER of 80bps.

The company addes in the rebalance is real estate firm Mabenee, which was listed on the main market of the Kuwait Stock Exchange in 2009. It operates under five main business lines: real estate development, real estate project management, logistics, shopping mall construction and management and real estate investment portfolios. Mabanee enters the ETF with an initial weight of 4.25 per cent.

Mezzan Holding Co (MEZZAN KK), a manufacturer and distributor of food, beverages, pharmaceutical and FMCG, is the company that has been deleted.
Abdullah Al-Basairi, Co-creator of the KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8), says: “This marks the final rebalance leading up to the MSCI inclusion in May/June.  Last year Goldman Sachs estimated that flows of USD2.3 billion in passive flows and USD8billion of active flows into Kuwait stocks. With March volatility leading to a price correction in the local Kuwaiti market, investors who missed the first window on gaining the post-announcement premiums in December2019 /January 2020 could have a second opportunity in March and April to build a position coming into the inclusion period in May.”

Ignatius Faissal, Director of Product Management at HANetf, says: “The Kuwaiti economy continues to diversify away from its oil-rich roots as part of the Vision 2035 project. This is being reflected in the addition of real-estate management companies to an ETF that already includes Banks, financial services providers, telecoms and industrial goods.”

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