Islamic banking already has a strong presence in Kuwait. With a number of innovative lenders competing in the sector, and support and regulatory oversight from the country's central bank, it looks as though the industry can only become a more prominent fixture on the country's financial landscape.
Kuwait may lay claim to more than 5% of the world's total oil reserves, but without the expertise and equipment needed to tap into the bulk of this, and with strict rules prohibiting foreign help, the country is struggling to realise its energy potential.
With performance starting to pick up again in the Kuwaiti banking sector, and strong growth potential both in the domestic market and in neighbouring Iraq, the small country is finding itself the focus of a growing number of lenders, with competition among them growing fierce.
Steadily rising oil prices, a stable economy and the implementation of the National Development Plan are causing ripples of optimism in Kuwait, as the country looks to build on the slow progress it has been making in recent years.
With a greatly increased technological capacity and a new external regulator increasing transparency, hopes are high that there will soon be a healthy pipeline of deals for the Kuwait Stock Exchange.
With the country's well-capitalised banking sector set to transition smoothly to Basel III standards and a positive macroeconomic outlook, central bank governor Mohammad Al-Hashel is able to concentrate on Kuwait's longer term prospects. He tells The Banker how he expects more growth in the Islamic banking sector and an increase in government spending, both of which will prove beneficial to the country's economy.
Corporate bond market participants are starting to look for alternative ways to trade bonds as regulations put the squeeze on the amount of liquidity in the banking system.
The prospect of a gradual rise in long-term interest rates in the US is significant for the highest grade sovereign, supranational and agency issuers, but there are other factors helping maintain healthy demand for their bonds.
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