Arab markets rebound in third quarter

Arab bourses rebounded in the third quarter of 2010 to match recovery in most global markets with their capitalization gaining nearly $63 billion and their composite index swelling by at least five per cent, according to official data.

But most of them recorded a decline in the value of traded shares and net foreign investment inflow except Dubai and two other regional exchanges, showed the figures by the Abu Dhabi-based Arab Monetary Fund (AMF).

Releasing its quarterly bulletin for July-September, the AMF said the improvement in the Arab bourses in the third quarter compared with the second quarter matched global recovery but fell short of growth in most other markets.

“Most Arab stock markets registered relatively improvement in their performance in the third quarter of this year following a decline in the second quarter…this improvement is linked to the recovery in global markets as well as better economic performance in the region and higher profits by listed companies,” said the AMF, the Arab League’s main financial organization.

“But this improvement was comparatively lower than that recorded in most markets in the advanced countries and emerging economies with the exception of Tokyo bourse, which slightly fell by just under one per cent.”

The report also said growth in Arab stock exchanges was confined to market capitalization and the AMF’s composite index which tracks regional bourse.

It showed the turnover, the value of traded shares, liquidity and foreign capital inflow receded in most Arab bourses in the third quarter.

As for the composite index, it swelled by around 5.6 per cent following a decline of 8.8 per cent in the second quarter, it said.

“The index in most Arab bourses recorded an increase in the third quarter except in Jordan, Lebanon, Sudan and Palestine….some bourses recorded growth of more than 10 per cent including Dubai, Qatar and Tunisia.”

The report showed the combined market capitalization of the region’s official bourses grew by about 7.3 per cent to nearly $933.1 billion at the end of September from $870 billion at the end of June.

Compared with the end of 2009, the value was up by around 3.3 per cent but it remains far lower than the capitalization of $1,390 billion at the end of June 2008, nearly 75 days before the eruption of the global fiscal crisis.

In contrast, turnover in the Arab bourses plunged by nearly 42.6 per cent in the third quarter to around $69.4 billion. Nearly 89 per cent of those shares were traded in the UAE, Saudi Arabia, Kuwait, Qatar and Egypt.

“Daily turnover in the Arab markets tumbled by around 39.2 per cent to around $1,139 million in the third quarter compared with around $1,874 million in the second quarter…in 2009, the average daily turnover stood at about $2,613 million and it was as high as $4,002 million in 2008,” the AMF said.

Its figures showed most regional markets suffered from a fall in foreign investment inflow except Dubai, Egypt and Qatar. “The net foreign investment in most Arab markets was negative in the third quarter except in those three markets, which recorded positive flows,” it said.

“As for initial public offerings (IPOs), the third quarter registered a decline compared with the previous two quarters as there were only three IPOs against 16 IPOs in the first half of the year…this means there were a total of 19 IPOs in the first nine months against 17 IPOs during 2009,” the report said.

It estimated the total value of IPOs at around $1,855 million in the first nine months of 2010, down from $2,056 million in the same period of 2009.

The report said the total number of companies listed in the Arab stock markets increased to 1,371 at the end of September from 1,364 at the end of June.

Jordan’s bourse overtook Egypt for the first time when its listed firms stood at 275 at the end of September. The report put the number of listed companies at 213 in Egypt, 212 in Kuwait, 143 in Saudi, 130 in the UAE, 120 in Oman, 55 in Tunisia, and 49 in Bahrain. Algeria had the lowest number of only two firms.

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