The Kuwait Investment Company has updated its strategy to adapt to the new business requirements.
Al-Ali: "Kuwait Investment Company" focuses on Digital Transformation
- The company's General Assembly has approved no dividends for the year of 2020
- 259 million Kuwaiti Dinars is the volume of combined assets owned, 2 billion for the managed asset, and recieved 106 million equity as a parent company's shareholders
Al-Subaie: "Kuwait Investment Company" faced the Corona crisis with acceptable results
- We are looking forward for the positive outcomes that will hopefully come out of 2021 as positive unlike 2020 which did not reach the company's goal after COVID-19
- A ratio of 45% of the proceeds of the "Robotics" portfolio, and the company's investments abroad (International) outperform all indicators
The Chairman of the Board of Directors of Kuwait Investment Company, Dr. Yousef Al Ali, confirmed the company's ability to cope with the difficult situation over the past year 2020, which witnessed a double crisis, the first of its kind, affecting the health and economic sectors in Kuwait and the world due to the outbreak of the COVID-19 pandemic.
During the meeting of the General Assembly of the Kuwait Investment Company, Al-Ali stressed that the conditions experienced by the world, which have devastated the world economy, disrupted activities and led to economic stagnation in industrialized and developing countries as a result of the pandemic, have affected the company's performance and results. However, the efforts of the executive management and all company employees enabled us to improve the results significantly during the second half of the year and achieve an acceptable performance in light of the deterioration of health conditions locally and globally and their negative repercussions on the economic affairs, which imposed restrictions on life, as a result of which all economic and commercial activities and businesses were disrupted.
Al Ali explained that with the onset of the pandemic that has affected the economies and markets of the world, the company's board of directors agreed to assign a sglobal consulting office to update the company's strategy for the next five years 2021-2025 to be in line with the impact of recent events on the local and global economy and then on the company's plans and performance. The strategy update was approved by the Board of Directors on December 29, 2020. The strategy adopts a number of pillars, the most important of which is the strength of the company as an Investment Company with assets of more than KD 200 million, as an investment manager with managed assets exceeding KD 2 billion and certainly the need for Digital Transformation.
He added that the forced disruption of various activities led to a decline in the performance of institutions in various industrial and service activities, most notably the transport sector in various forms of land, sea and air, the hospitality sector hotel and catering services and the goods distribution sector, noting that the Kuwait Investment Company worked to control costs to reduce losses, which are expected under the above conditions and did not exceed 5.6 million dinars at the end of 2020. The combined assets amounted to 259 million dinars compared to 293 million dinars at the end of 2019, while the shareholders' equity of the parent company amounted to 106 million dinars compared to 124 million dinars at the end of 2019. The Company's Board of Directors recommended no dividend for 2020.
Locally, Al-Ali pointed out that the general reserve has become inadequate after its funds had been used to enhance public spending capacity. The options for financing deficit by borrowing either directly from the domestic or international banking system or offering bonds and treasury bills as an as an insurmountable alternative. However, borrowing must be determined by clear criteria based on rationalization of spending and a road map for addressing public debt over the coming years.
Facing the Crisis
In turn, the CEO of Kuwait Investment Company, Bader Al-Subaie, stressed the company's ability to respond to the crisis resulting from the COVID-19 pandemic, achieving acceptable results under difficult conditions. However, those conditions cannot be overcome without the development of the performance of the local economy and the improvement of the global investment environment and the world being able to provide appropriate mechanisms to combat the pandemic based on science, knowledge, medical and pharmaceutical research.
He also added: "We hope that the country will be able to address the effects of the pandemic and expedite the provision of adequate vaccines to all residents of Kuwait in order to help resume life and revitalize various businesses, as the company hopes that 2021 will be different from 2020 enhancing the capabilities to achieve the best results. He points out that last year was not normal or traditional after the COVID-19 pandemic spread in various countries of the world since the end of 2019, which caused disruption of life and movement of people, led to massive damages to the world economy and pushed into recession, deflation and high unemployment rates in various countries of the world.
Al-Subaie pointed out that the Kuwait Investment Company has been able to achieve appropriate results from asset management. The company's updated strategy emphasized the importance of focusing on investment tools from non-traditional activities that focus on the need for digital transformation and rely on advanced technology, such as Fintech, Robotics and Biotechnology investments related to climate change.
Al-Subaie said that these strategic trends led to good results in 2020. The Robotics investment portfolio managed to achieve a profitable return of 45%, pointing out that the company's global investments have outperformed all comparative indicators. However, the performance of local investment funds and portfolios in 2020 was uneven. Al-Atheer Telecom Fund achieved an outstanding performance of 9.32% outperforming the performance of the Special Measurement Index (S&P index of Arab Telecom Companies, which achieved 5.6%). Given the conditions of the Kuwait Stock Exchange last year, the net unit value of Al-Raed Investment Fund decreased by 11.3%. The Kuwait Investment Fund recorded a decrease of 5.07%, but the performance of the funds managed by the company locally remains better than the performance of the stock market indices, as the general market index closed with losses amounting to 11.7% and the first market index of the leading stocks lost 13.26%.
As part of direct investment, the company's real estate Investments in the Federal Republic of Germany has achieved good results and the company has distributed the proceeds from real estate portfolios to Investors.
Steps to Address Deficit
Dr. Yousef al-Ali said that Kuwait's budget deficit for fiscal year 2020/2021 will be record at a rate that may exceed 30% of Kuwait's GDP, which quickly requiresa rational approach of spending and adoption of programs and strategies that will boost Public Treasury revenues from a variety of sources, most importantly not to waste money in the reserve fund for future generations. I believe borrowing as an insurmountable alternative, improving the capacity to diversify investment instruments, and developing a road map to meet public debt benefits in the coming years.
Company Systems Development
Badr Al-Subaie stressed that the Kuwait Investment Company seeks to achieve the best results on its investments and customer investments. It has developed its systems related to operations and upgraded them to processes that adopt digital technology. It has also enhanced the ability of employees to accomplish tasks online from home. This helped to regularize business during the year after COVID-19 pandemic that led to the closure of offices and the forced labour outside the premises. The development of operations enabled the modernization of the trading system and interaction with the requirements of the Kuwait Stock Exchange.