Arab bourses gain $100bn in 2010

Arab stock markets are drawing their curtains for 2010 with a massive gain of nearly $100 billion and the bulk of the increase has come from Saudi Arabia, Qatar and Kuwait, according to official data.

But turnover, the value of traded shares, plunged by nearly $224 billion as dealers remained wary about economic conditions and foreign investors largely reduced their activities in the region in the wake of the 2008 global fiscal turmoil, showed the figures by the Abu Dhabi-based Arab Monetary Fund (AMF).

From around $887.08 billion at the end of 2009, the combined market capitalization of the region’s stock exchanges surged to nearly $986.6 billion towards the end of 2010, an increase of nearly $100 billion.

The report by the AMF, a key Arab League establishment which tracks regional bourses, showed growth in 2010 extended a capital rise over the past two years but the level remained far below the peak capital of $1,300 billion at the end of 2007. It dipped to nearly $805 billion at the end of 2008 before rebounding to around $887 billion at the end of 2009, according to the AMF.

A breakdown showed Saudi Arabia, Qatar and Kuwait were the star performers through 2010 as they accounted for the bulk of the capital increase.

Saudi Arabia’s Tadawul, by far the largest and busiest stock market in the Middle East, shot up to nearly $353 billion at the end of 2010 from $318.7 billion at the end of 2009, an increase of around 34.3 billion.

Qatar’s market capitalization soared by $37 billion to $124.9 billion from $87.9 billion while Kuwait’s bourse jumped by about $20 billion to nearly $124 billion from around $104.2 billion in the same period.

Outside the Gulf, Morocco’s exchange emerged as a key gainer, with its capital swelling by around $eight billion to $68.8 billion.

In the UAE, Dubai and Abu Dhabi bourses shrank by around $four billion and $two billion to reach $54.5 billion and $70.8 billion respectively, having seesawed up and down through 2010. Oman and Bahrain emerged as Gulf gainers, rising by nearly $three billion each to $21.7 billion and $19.8 billion respectively.

Egypt’s bourse, the largest outside the Gulf, dipped by about $two billion to end the year at nearly $84 billion. The markets of Jordan and Lebanon slipped by around $900 million and $200 million to $31 billion and $18 billion respectively.

The smaller Arab markets of Tunisia and Palestine grew by about $2.5 billion and $200 million to nearly $11.8 billion and $3.4 billion, the AMF report showed.

In terms of trading, turnover in the region’s markets plummeted by around $224 billion through 2010 and the bulk of the decline was in the Saudi bourse, which normally accounts for nearly two thirds of the total value of Arab traded shares.

“There was a large decline in turnover in the Gulf and other Arab countries last year to extend a steady fall over in previous years…this is because of lower foreign participation and psychological fears by local investors amidst uncertain economic conditions,” said Jamal Ajjaj, a dealer at the Shaarjah-based Al Sharhan Securities, a key UAE stockbrokerage firm.

“Normally, trading should be high when interest rates are at one of their lowest levels but this has to do with the general skeptic sentiment after the global crisis and debt default problems in the region.”

From around $567 billion in 2009, the value of shares traded in the Arab markets slumped to about $343 billion in 2010. It was as high as $891 billion in 2008, nearly $1,009 billion in 2007 and as high as $1,594 billion in 2006.

Trading in Saudi Arabia plunged to nearly $189 billion this year from $322 billion in 2009 while turnover in Dubai tumbled to $18 billion from $46 billion and that in Abu Dhabi to nearly $nine billion from about $18 billion.

The value in Kuwait sank to nearly $42 billion from $74 billion while that in Qatar declined to $17 billion from $24 billion. In Bahrain and Oman, it dipped to $0.22 billion from $0.4 billion and to $3.2 billion from $5.3 billion.

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