The value of sukuk (Islamic bonds) issued in the Arab region rebounded by nearly 33 per cent in the third quarter of this year but IPOs and foreign capital inflow suffered a setback, according to official data.
From around $2.4 billion worth of 10 sukuk issues in the second quarter, the value soared to nearly $3.19 billion worth of 12 issues in the third quarter, showed the figures by the Abu Dhabi-based Arab Monetary Fund (AMF).
Despite the increase, the value in the third quarter remains sharply below that in the first quarter, when 13 sukuk were issued worth nearly $10.67bn.
“Political unrest in the region has not largely affected sukuk but it has put much pressure on foreign capital inflow and IPOs,” said the AMF, which is affiliated to the Cairo-based Arab League.
“After a relative improvement in the IPO market in the Arab World in the second quarter of this year, activity receded again in the third quarter because of the regional political events, which have pushed many companies to postpone plans to issue new IPOs.”
The report showed only three IPOs worth $283 million were issued in the third quarter compared with six issues worth $375m in the second quarter. It put the total IPOs issued in the Arab region in the first nine months of 2011 at 11 worth nearly $679m.
“Regarding investment, it has been noticed that foreign investors continued to pill out of the region’s markets as sales of shares by foreign investors largely exceeded their purchases with the exception of the bourses of Abu Dhabi, Amman, Riyadh and Muscat….these markets relatively performed better as they recorded a positive net foreign capital flow.”
Arab stock markets have been hit by political turmoil in the Middle East and North Africa as well as global financial turbulence. According to the AMF, their collective capitalization sank by nearly $88 billion at the end of September from its level at the end of the second quarter.
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