Arab bourses soar to two-year high

Strong oil prices allied with Doha’s winning of a bid to host the world cup finals in 2022 have lifted regional bourse to their highest level in nearly two years and the bulk of the increase was in the markets of Qatar and Saudi Arabia.

The market capitalization of 13 official bourses in the region gained more than $20 billion in the first 10 months of December and nearly 80 per cent of the increase was in the bourses of Qatar and Saudi Arabia, according to data by the Abu Dhabi-based Arab Monetary Fund (AMF), a key Arab league institution.

From around $961.2 billion at the end of November, the combined market capitalization of those bourses climbed to nearly $981.8 billion, the highest level since the end of 2008, the AMF figures showed.

Qatar’s bourse gained around $eight billion to swell to one of its highest levels of around $126.7 billion while Saudi Arabia’s Tadawul, the largest and busiest bourse in the Middle East, also added about $eight billion in 10 days.

The latest increase in the Arab capitalization meant regional bourses have gained around $67 billion so far in 2010 but they remained far below their level of nearly $1,330 billion at the end of 2007.

“There is no doubt that Qatar’s winning the bid for hosting the world cup finals in 2022 has had a very strong positive impact on dealing,” said Jamal Ajjaj, a stock broker at the Sharjah-based Sharhan Securities.

“Most other markets in the region, mainly those in the Gulf countries, also were gainers over the past couple of weeks…this is because of an expected improvement in corporate performance in the fourth quarter and the recent large increase in oil prices which usually have direct and indirect impact on bourses.”

The AMF figures showed Kuwait gained around $600 million to reach $123.4 billion on Thursday while Dubai and Abu Dhabi edged up slightly by nearly $100 million and $300 million respectively to reach $55.5 billion and $71.8 billion.

Bahrain recorded a slight fall of around $100 million while Oman climbed by nearly $600 million in the same period.

Outside the Gulf, Morocco emerged as the main gainer, swelling by around $2.9 billion to nearly $69.4 billion while Egypt increased by nearly $300 million to end Thursday at about $84.2 billion, according to the AMF, which tracks regional exchanges through its Arab stocks data base.

Jordan and Lebanon remained unchanged at around $30 billion and $17.8 billion respectively while Tunisia slipped by $200 million and the Palestinian bourse added just around $two million to end the day at $3.42 billion.

The report showed GCC bourses have remained the dominant market in the Arab region in terms of capitalization, which accounted for about 79 per cent of the total Arab market capitalization on Thursday. Saudi Arabia alone controlled nearly $35 per cent of the total Arab capitalization.

Gulf and other Arab markets are still recovering from the repercussions of the 2008 global fiscal crisis and regional debt default problems and experts believe the markets will rebound slightly and record relative stability in 2011.

The markets were highly volatile through 2010, with their combined capitalization soaring from $894.8 billion at the start of the year to $924.3 billion at the end of February and $970 billion at the end of March.

It continued its climb to reach $980 billion in April before plunging to about $893 billion in May and $881 billion in June. Capitalization rebounded to $905 billion in July and went up maintained growth to reach $938 billion in September and around $954 billion in October before ending November at $958.3 billion.

Arab stock markets recorded their best performance through 2007 when they gained a staggering $460 billion before collapsing by around $500 billion at the end of 2008 because of the crisis. They swelled by around $82 billion in 2009 and are projected to end 2010 with a bigger gain.

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