Arab equity investors lose $15bn in three weeks

Arab equity investors ended the third week of August less wealthy by around $15 billion and nearly half the losses were in Saudi Arabia’s largest and most speculative stock market, official data showed on Sunday.

The combined loss of 13 official stock exchanges in the Arab world was far lower compared to the start of this year, standing at only around $four billion, showed the figures by the Abu Dhabi-based Arab Monetary Fund.

From about $905.7 billion at the end of July, the total market capitalization of the 13 bourses dipped to nearly $890.9 billion on August 21, a decline of around $14.8 billion in three weeks, the Arab League’s main financial institution said.

A breakdown showed seven bourses recorded losses while five were gainers and one—Lebanon’s market—remained flat.

Saudi Arabia, which controls more than two thirds of share turnover in the region’s exchanges, emerged as the main loser in the first three weeks of August, with its market capitalization shrinking by around $seven billion to nearly $321.8 billion from $328.6 billion during that period.

Qatar fell by nearly $three billion to $103.8 billion while Abu Dhabi lost around $1.5 billion to $66.9 billion. Dubai dropped by about $one billion to $52.3 billion while Morocco dipped by about $6.5 billion to $61.7 billion. There was also a slight decline in the markets of Jordan and Palestine.

Gainers included Kuwait, which swelled by around $one billion to $111.3 billion and Egypt, which added nearly $two billion to climb to $76.3 billion. Other gains were Bahrain, Oman and Tunisia, the report showed.

Arab bourses have seesawed since the start of this year but have remained relatively stable, losing only around $four billion since January 1.

This was in contrast with the sharp fluctuations over the past two years because of the 2008 global fiscal distress and turmoil in the Gulf banking system due to regional debt default problems that have caused losses to many banks.

From around $1,330 billion at the end of 2007, the combined capitalization of the Arab bourses plummeted to nearly $805 billion at the end of 2008 before it rebounded to nearly $894 billion at the end of 2009.

Dealers said they expected the performance to remain relatively stable through 2010 on the grounds the global economy is recovering slowly and the financial and real estate sectors in the Gulf are still in a state of uncertainty.

“We call this year as period of stability and slow recovery after the markets here reached their bottom and will unlikely plunge further…we think next year will be better and mark a real beginning of growth,” said Fadi Kiswani, a dealer at the Sharjah-based Sharhan Securities, a key UAE stock brokerage firm.

The AMF figures showed Arab markets have been through a stable and calm period over the past two months because of the summer break.

Their combined turnover, the value of traded shares, stood at only around $10.5 billion during the first three weeks of August compared with around $24.6 billion in July and $24.7 billion in June. Turnover was as high as $38.4 billion in May and an eight-month high of about $39.7 billion in April, when most listed companies released quarterly results.

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