(MENAFN- Arab Times) The Arab Investment Company (AIC) held a press conference on Wednesday morning announcing their development of the Beta coefficient; their latest analytical development for the prediction of changes in the Kuwaiti market. On May 13, 2012, the Kuwait Stock Exchange reclassified the shares of the market from 7 sectors to 12 sectors, rendering the analytical tools which had been used to predict the market trends and the sectors' volatility no longer applicable. The change led to a hole in the capacity for investment companies to make predictions and thus invest in Kuwaiti finances.
The development of the Beta coefficient was designed specifically to fill this hole. "Our strategy was to consolidate our theoretical and intellectual expertise in order to work with the tools of financial investment," said Dr. Najat Al-Suwaidi, President of AIC. "AIC seeks distinction in its performance, supported by the employee's high level of technical abilities and enthusiasm."
Feasibility
The lack of records and statistics that resulted out of the reclassification of the sectors led to an impossibility in carrying out risk assessment and feasibility studies, which had adversely affected the market. In order to rectify this, AIC's research division, under the leadership of Dr Farid Lian, AIC Senior Vice-President for Research and Business Development, took up the task of researching and deriving the Beta coefficient of the 12 new sectors. Dr Lian stated, "Perhaps the main achievement of AIC research team has been the development of a fully automated system which, when activated, would autonomously update itself to capture developments in total performance constituents, detect and indicate the listing of new shares, and recalibrate itself accordingly, so as to return the updated Beta coefficient for each of the market's twelve sectors at any point in time."
Moreover, as a fully automated system, designed by Dr Lian and executed by Zahid Mukadam, the Beta coefficient is not susceptible to human error, and does not require human intervention. The Beta coefficient provides a comprehensive risk-factoring system, sensitive the all the fluctuations of the market and compiling all information simultaneously, based on Total Monthly Performances (price, bonus shares and cash distributions) from the past 5 years, and Thomson-Reuter's database for the calculation of month-on-month share prices and the value of bonus shares.
Furthermore, as a gesture of good corporate citizenship, AIC's management made the decision for the Beta coefficient to be available to financial or research institution upon request. Such a move is expected to allow a revival of the market which has been hit by rough circumstances. AIC has previously provided various different programs, such as the GCC Equity Selection Model, the Share Ranking Program, the Liquidity Ranking Program and the Blue Chips Program. AIC has also provided two selective indicators; the Kuwait Islamic Index and the GCC Islamic Banks Index.
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