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| The NIC 50 is a market capitalization weighted index which tracks the 50 most traded companies by value listed on the Kuwait Stock Exchange. The NIC 50 began on Dec. 31, 1996 with base of 1,000. | | | | |
| To be used as a tool to benchmark the performance of equity portfolios such as investment funds in the Kuwait Stock Market. | | | | |
| | NIC devised and developed the NIC 50 index to provide a more realistic picture of the performance of the Kuwait Stock Market during any given trading day throughout the year. NIC identified the market indices, both simple and weighted, did not present an accurate reflection of the market movement/performance to investors due to the following: | | | | The price index tracks stock performance based on prices. The weighted index tracks stock performance based on market capitalization. None of the market indices take into account the liquidity factor which is a necessary and important factor in determining the true direction of the market. Sudden surges or drops in prices of illiquid stocks distort market levels and do not reflect the true performance of the majority stocks which are readily tradable by the public. | | | | With respect to the price index, significant price movements of small cap stocks, considerably affect the index levels although the % market cap versus the total market is very small. This results in index levels that do not represent the performance of stocks which comprise the majority of the index by value. |
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| | NIC 50 selects the 50 most traded stocks by value and then weights them according to their market capitalization. This process is done quarterly on a year-on-year basis to determine which stocks fit the criteria, with amendments made accordingly. A report listing the components of the index and any additions or deletions are reported in selected Kuwaiti daily newspapers on a quarterly basis. |
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| The NIC 50 index takes into account the price, liquidity and market capitalization of stocks listed on the Kuwait Stock Exchange thus presenting a more insightful and true picture of performance levels to investors. | | | | Illiquid stocks are eliminated and significant price movements of small cap's have a reduced affect on overall market levels. | | | | The NIC 50 index, on average, representeds approximately 70% of the market capitalization of the KSE for the year 2004/2005. | | | | The NIC 50 index, on average, represents more than 80% of the year-on-year market value traded of the KSE for the year 2004/2005. |
| | | The graph below depicts the performance of the KSE Price index relative to the NIC 50 over a one year period. | | | |
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