KUWAIT CITY, Aug 8: The change of regime in Iraq along with the prevalent higher oil prices seems to drive the Kuwait stock market and improved the stability in the region thereby reducing the risk premium and improving the valuations of companies.

A study conducted by Global Investment House said after having recorded substantial gains in the last couple of years, Kuwait Stock Exchange (KSE) clearly seems to be in a consolidation phase.

It said while world still struggles for economic recovery, Kuwait economy backed by strong oil prices and lower interest rates was going through a growth phase.

As per the recently available data the economy recorded a nominal growth of 2.5 per cent in 2002 and it is estimated to register real growth of 2.7 per cent in the current year.

The study said sooner the stability and favourable government prevail in Iraq, several positives including financial activity and trade would also improve between the two countries.

In the initial year’s subcontracts from the Iraq rebuilding process would also benefits the Kuwaiti companies.

The only negative impact, which might come out, would be decline in oil prices due to full oil production from the Iraqi oil fields, but this could be of some extent compensated by an increase in trading activity, the study said.