SAFE HAVEN ASSETS: ARE THEY STILL SAFE DURING COVID-19 PANDEMIC PERIOD?

During political, financial, and economic turmoil periods investors tend to flee toward what is called safe haven assets such as gold, Swiss franc and lately, Bitcoin. While previous literature supports such assumption, these studies were based on crises that faced certain geographic locations. The coronavirus pandemic on the other hand is a global crisis that affects the whole world. This study aims to examine the validity of the assumption that the Swiss franc, gold, and Bitcoin would still act as safe haven assets during Covid-19 pandemic period. Results obtained from this study shows that Swiss franc, gold had a positive returns during the study period which is in line with safe haven assets characteristics, but these returns were not caused by the stock markets negative returns. Bitcoin on the other hand showed negative returns during the study period and statistically significant positive relation with S&P 500 returns indicating that Bitcoin cannot be used as a safe haven asset. JEL: G10; G11; G15  Article visualizations

Financial Ratios and Stock Price Predictability: A Study on Mobile Telecommunication Companies in Kuwait

Purpose: This paper aims to investigate the applicability of financial ratios derived from financial statements to predict the stock prices of mobile telecommunication companies in Kuwait. Methods: The pooled OLS regression method is used to examine the relationship between share prices (SP), as a dependent variable, against earnings per share (EPS), liquidity ratio (Liq), price to earnings (P/E) ratio, debt to equity (D/E) ratio, dividend yield (DY), and market to book value (M/B) ratio as independent variables. Results: Pooled OLS regression revealed that EPS and Liq have a statistically significant positive relationship with share prices, while the debt-to-equity (D/E) ratio shows a significant inverse relationship with share prices. Other factors under study did not show any significant relationship with share prices. Implications: The research results would help both investors and companies' top management identify the ratios that affect share price most. The results would help investors detect the factors that they should consider when making their investment decisions to improve their investment profitability and for the company's management to focus their efforts on improving these ratios to enhance shareholders' wealth. Originality: This study is a pioneering attempt to address the effect of financial ratios on the share prices of mobile telecommunication companies in Kuwait. Limitations: The relationship between financial ratios and share prices has been extensively researched and the results were very inconsistent which indicates that the effect of financial ratios on share price may vary from market to market

The Profitability of Using Pegged Currencies in Carry Trade: A Case of Saudi Riyal

This paper examines the profitability of using pegged currencies in carry trade. Conducting this exercise on Saudi riyal against six floating currencies has proven to be very rewarding especially when enhanced with forecasting methods. Carry trade is a very popular currency speculation strategy among traders, where they borrow low-interest currencies and invest in high-interest currencies. It is a strategy that takes advantage of interest rate differentials between two currencies. Such strategy should not work under uncovered interest parity (UIP), since according to UIP high interest rate currencies should depreciate against low interest rate currencies by the interest rate differential itself. But studies have shown that UIP does not stand and carry traders are profiting from it. As a result of its failure, carry traders are making returns matching the returns of the S&P 500 and outperforming it in terms of the Sharpe ratio

BANKRUPTCY RISK AND SHARE PRICES: A CASE STUDY ON ENERGY COMPANIES IN KUWAIT

This study aims to investigate how investors' perceptions of risk impact the stock prices of energy companies listed on the Kuwait Stock Exchange (KSE) from 2016 to 2023. Investors' belief in the future financial stability of the companies they invest in influences their risk perception. Therefore, if investors hold pessimistic views, they will decrease their investment in these companies, causing share prices to drop, and vice versa. The Zmijewski x-score model is utilized in this study as a measure of risk to assess the financial stability of Kuwaiti energy companies and its impact on their stock prices. The study employs ordinary least square regression (OLS) to analyze the correlation between the x-score and share prices. Results from this research indicated that there was no statistically significant relation between Zmijewski's x-score and stock price and that investors look at other factors when choosing their investments. This is evident because the company with the greatest bankruptcy risk in the following two years also had the second-highest share price. JEL: G1, G4, M21  Article visualizations

MARKETING EXPENDITURE IMPACT ON BANK’S FINANCIAL PERFORMANCE: A CASE STUDY ON KUWAITI BANKS

Marketing personnel are always under pressure to justify their marketing strategies expenses to bank top management and shareholders. This study aims to provide some justification for their expenses by linking it to the financial performance of the firm. Using the data of ten Kuwaiti banks that are listed at Kuwait stock exchange (KSE) over the period spanning from 2008 to 2018, results show that there is a statistically significant direct relation between marketing expenditure and the financial performance of banks in Kuwait. In addition, results show that both bank size and assets per employee also have a direct relation with bank performance. JEL: G21; G24; G10 Article visualizations

Exploring the Nexus between Profitability, Dividend Policy and Share Prices in Kuwaiti Insurance Companies

The purpose of this study is to investigate the impact of dividend policy and profitability ratios on the share prices of insurance companies listed on Kuwait Stock Exchange (KSE) between 2014 and 2022. The study's findings demonstrated that 42.4% of share prices could be explained by factors related to profitability and dividend policy. Earnings per share (EPS) was the only variable that demonstrated a significant direct relationship with share prices when the individual effects of each variable were examined. While dividend payout ratio (DPR) exhibited a negative correlation with stock prices, it was not statistically significant. Other characteristics that were considered included dividend yield (DY) and interest rate (IR), both of which showed significant inverse relations. This study concludes that investors in Kuwait Stock Exchange (KSE) shares of the insurance sector favor unpredictable future capital gains over more assured dividends

Examining the Effect of Altman’s Zeta Model Score on the Share Price of Healthcare Companies Listed at Kuwait Stock Exchange

The aim of this study is to examine the financial soundness and the effect of Altman&amp;rsquo;s Zeta model score on the share price of healthcare companies listed at Kuwait stock exchange (KSE) over the period 2013-2017. Zeta model is a widely used model in examining the probability of bankruptcy for companies; it has been proven to be a reliable model in measuring the financial soundness for companies. Results obtained from this study showed that both companies under study, Yiaco and Advanced Technology, are confronting financial difficulties and are facing the risk of bankruptcy. The study also revealed that there is a statistically significant direct relation between Zeta score and the share price of these companies indicating that Kuwaiti investors do take the financial distress indicators into consideration when making their investment decisions.</jats:p

Conducting Business with God: Is God Blessing Islamic Banks with Better Financial Performance than Conventional Banks?

This study aims to compare the financial performance between Islamic and conventional banks listed at Kuwait stock exchange over the period 2011-2018 using the modified DuPont model of financial analysis which is based on the analysis of return on equity (ROE). Unlike previous studies where researchers compared the performance on a bank-to-bank basis, this study examines the aggregate ratios of Islamic banks and compare it to aggregate ratios of conventional banks. The study also adds volatility into the model since consistency in returns indicated a more stable sector.  Results obtained from this study showed that conventional banks in Kuwait had a better mean performance during the study period in terms of both return on assets (ROA) and return in equity (ROE), Islamic banks also showed a higher deviation in these two ratios resulting in a lower Sharpe ratio. While the results showed no statistically significant mean difference between Islamic and conventional banks in terms of return on assets (ROA), the results also showed a statistically significant difference in mean return on equity (ROE) between the two sub-sectors.  On the other hand, Islamic banks showed an impressive improvement in their ratios during the last three years of the study period which impose a real threat to conventional banks in the future.</jats:p

Staff Efficiency Effects on Financial Performance: A Case Study on Kuwaiti Banks

An efficient employee is considered as a valuable asset in any organization, but measuring employee efficiency is not an easy task. This study aims to measure and compare staff efficiency in Kuwaiti banks using the financial performance of the bank as an efficiency proxy. Return on assets (ROA) and return on equity (ROE) are set as dependent variables, and total assets per employee, cost per employee, revenue per employee, number of staff per branch, and total employees’ cost to total revenues are set as independent variables. Using panel OLS regression on the data of 10 Kuwaiti banks that are listed at Kuwait stock exchange (KSE) over the period 2010-2018, results showed that total assets per employee, cost per employee, revenue per employee all had a significant direct relationship with both ROA and ROE and only total employees’ cost to total revenues showed a significant inverse relationship with the financial performance of the banks. The number of staff per branch was the only variable that had no relation with both ROA and ROE. The model showed that the National bank of Kuwait had the most efficient employees’ when it comes to ROA, while Ahli United bank had the most efficient employees’ when ROE was used to measure staff efficiency. In both cases, ROA and ROE, Warba bank had the least efficient staff among all banks under study.</jats:p