Arab bourses dip as Saudi surges

Most Arab stock markets maintained a downward trend in the first three weeks of 2012 as they continued to reel under the effects of the global financial upheaval and political unrest sweeping the region. 

Saudi Arabia was the only bourse to stage a strong recovery following the announcement of the Gulf Kingdom’s largest budget for 2012, with its market capitalization gaining nearly $12 billion in the first three weeks of 2012. 

The increase offset all losses in other Arab stock exchanges as the combined market capitalization of the region’s 14 official trading floors remaining unchanged at $879 billion on January 21. 

Figures by the Abu Dhabi-based Arab Monetary Fund (AMF), an IMF-style Arab League establishment which tracks the share movement in the region’s equity markets, showed all other major bourses in the Arab world continued to lose momentum over the past three weeks. 

“There is a psychological downward pressure on regional markets because of the political situation in the region and the global financial turmoil…Saudi Arabia was up after the announcement of a record budget apparently boosted investor confidence,” said Jamal Ajjaj of the Sharjah-based Al-Sharhan Securities, a key UAE stock brokerage firm. 

The report showed Dubai’s bourse slipped to$49.2 billion on January 21 from $49.5 billion at the end of 2011 while Abu Dhabi fell to $63.4 billion from around $65.8 billion. Kuwait dropped to about $100 billon from $102.7 billion while Qatar shrank to $123.7 billion from $125.7 billion. 

Bahrain’s bourse also receded to $16.4 billion from $17 billion but capitalization in Oman’s Muscat market rebounded to$19.7 billion from around $18.8 billion, the AMF report showed. 

Saudi Arabia’s Tadawul, the largest and busiest bourse in the Middle East, was the main gainer during that period, swelling to nearly $340.3 billion on January 21 from $328 billion at the end of 2011. The market had lost about $25 billion through 2011, the report showed.

Outside the oil-rich Gulf, Egypt’s bourse continued to decline to reach one of its lowest levels in many years of around $50.5 billion from $52.4 billon while Morocco also receded to $60.1 billon from $62 billion in the same period. 

Lebanon was another gainer, with its capitalization rising to $16.3 billion from $15.4 billion. Jordan’s Amman bourse retreated to around $25.5 billon from $26.7 billion while Damascus market reached its lowest level of $1.4 billion after it was introduced into the AMF data base in 2011. 

Earlier AMF data showed the combined Arab market capitalization dived by nearly $111.7 billion in 2011 to its lowest point since 2005 and one of its lowest levels since fragile oil prices began their climb in 2000. 

The large decline was in sharp contrast with most of the region’s economies, which are projected to have recorded relatively high growth rates due to strong crude prices and a sharp rise in public spending in some members. 

Saudi Arabia, Kuwait and Egypt’s bourses were the main victims last year as they accounted for more than 70 the total loss in the region’s markets. 

From around $991.5bn at the end of 2010, the collective Arab market capitalization tumbled to nearly $879.8bn towards the end of 2011, a total loss of about $111.7bn and an average loss of nearly 440 million a day.

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