Steven Telford

This study investigates the contemporaneous associations between investor sentiment, market microstructure, and daily sectoral returns on Boursa Kuwait. The analysis utilizes daily data spanning from January 2021 to May 2025, integrating sectoral returns, trading volume, liquidity, and volatility proxies alongside a manually constructed sentiment index derived from financial news and market announcements. Ordinary least squares (OLS) regressions were estimated for each sector. Baseline specifications incorporate the High–Low Range, Parkinson volatility, and trading volume, while expanded models include the Log_Amihud illiquidity measure, CC_Volatility, Brent crude oil returns, the Boursa Kuwait All Share Index (AllShare_Return), and the first difference of Central Bank of Kuwait discount rate (D_CBK_DiscountRate). Initial results indicate that investor sentiment is significantly associated with returns in several sectors, though the direction and magnitude of these associations are heterogeneous. Upon controlling for broader market and macroeconomic conditions, the sentiment coefficient remains statistically significant in the Technology and Health Care sectors, with the Technology coefficient changing from positive in the baseline specification to negative in the expanded specification. Liquidity and volatility measures continue to exhibit sector-specific associations. AllShare_Return is positively and statistically significantly associated with returns across most sectors, whereas Brent_Return and the D_CBK_DiscountRate show limited, sector-specific relationships. These findings suggest that broader market conditions account for an important part of daily sectoral return variation, whereas the associations of investor sentiment and market microstructure with returns continue to differ across sectors.

This study provides an empirical investigation into the impact of corporate sustainability practices on financial performance in Boursa Kuwait over the period 2015 to 2025. While existing literature has largely focused on firm-level analyses of ESG practices, limited attention has been given to their aggregated effect on market-level outcomes, particularly in emerging markets such as Kuwait. Moving beyond these gaps, the research conceptualizes sustainability as a potential systemic determinant of market behavior, examining its influence on the All Share, Main Market, and Premier Market indices. The study evaluates how variations in environmental performance, governance quality, and transparency of sustainability disclosures are transmitted into various market outcomes, including index returns, volatility, and market capitalization. Employing a combination of regression analysis and time-series modeling, the framework captures both short-term fluctuations and long-term structural dynamics, enabling a nuanced understanding of the complex interplay between ESG practices and market performance. Anticipated findings suggest that improvements in governance mechanisms and sustainability disclosure standards are likely to stabilize market dynamics, mitigate volatility, and support consistent index performance in the longer term, while short term expectations are more difficult to speculate upon. Additionally, the adoption of ESG practices is hypothesized exert positive influence on investor confidence and market participation, as it’s considered to reflect a gradual alignment of Kuwait’s capital market with global sustainability norms.