Arab markets lose $98bn in second quarter

Arab equity investors ended the second quarter of 2010 less wealthy by $98 billion (Dh360bn) and those in Gulf oil producers were the main victim of the decline that was linked to the Greek debt crisis, official data showed Thursday.

From around $967bn at the end of the first quarter, the combined market capitalisation of the Arab region’s 15 official stock exchanges plummetted to nearly $869bn, showed the figures by the joint Arab stocks data network at the Abu Dhabi-based Arab Monetary Fund (AMF).

The bulk of the decline was in the capitalisation of Abu Dhabi, Saudi Arabia, Kuwait and Qatar, which recorded a combined drop of around $76bn in the second quarter, nearly 77 per cent of the total fall in the Arab bourses.

Saudi Arabia’s Tadawul, by far the largest and most speculative stock market in the Middle East, tumbled by about $39bn to $319bn at the end of the second quarter from nearly $358bn at the end of the first quarter.

The decline slightly depressed its share of the consolidated Arab market capitalisation to around 36.7 per cent from 37 per cent in the same period.

Kuwait, the second largest and busiest Arab bourse, dipped by about $16bn to $88bn from $104bn while Abu Dhabi lost around $11bn to recede to $73bn from about $94bn, according to AMF, the main financial establishment in the Cairo-based Arab League.

Qatar’s Doha Securities Market slumped by about $10bn to reach nearly $100bn compared with $110bn, the figures showed. Dubai’s bourse, one of the busiest and most open markets in the region, shed only around $1.7bn to $52.2bn against $53.9bn.

Outside the Gulf, key Arab bourses also ended the second quarter as losers, with that of Egypt shrinking by around $nine billion to reach $74bn at the end of June against $83bn at the end of March. Morocco’s bourse dipped by $7bn to about $63bn from $70bn.

The report also reported a decline in the markets of Jordan, Bahrain, Sudan, and Lebanon while there was a slight rise in the bourses of Tunisia and Algeria, among the smallest stock markets in the region. Despite persistent tensions in the occupied Arab territories, the Palestinian bourse in the West Bank went up to around $2.54bn from $2.42bn in the same period.

The report showed the total companies trading their shares in the Arab bourses declined by three to 1,414 at the end of June from 1,417 at the end of March.

A breakdown showed there was a decline was mainly in Egypt, where they dipped to 215 from 219 companies. Trading firms in Oman and Morocco shrank by two each while those in Abu Dhabi fall by one.

Some bourses remained unchanged while they rose in other markets, mainly Saudi Arabia, which recorded an increase by four companies to 143 from 139.

Releasing its semi-annual report last week, the AMF said regional bourses were generally affected by the Greek debt crisis in the second quarter of 2010. It said the decline followed good performance in the previous four quarters.

“Most Arab markets recorded a marked decline during the second quarter of this year to reverse a gradual recovery and improvement they had witnessed since the second quarter of 2009,” said the AMF, a regional IMF-style institution.

“The decline was mainly a result of the state of instability that hit global markets due to fears from the Greek debt crisis, which has created a state of uncertainty among regional investors and their market outlook. The Arab markets have also been affected by the fall in the profits and dividends by some companies.” The report said Arab markets suffered from a decline despite projections about a better outlook for the economic performance of regional countries.

“This shows how close the Arab markets have become to global markets although this varies from one market to another, depending on the ability of each market to attract foreign capital. There is no doubt the Arab markets which have more foreign investment are naturally more influenced by global crises.”
 

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