Tighter bank credit and the overall investor concerns have dragged down the combined value of shares traded on Arab stock markets by over $324 billion (Dh1.19 trillion) in 2009.
Official data showed the collective turnover of the 13 main official Arab stock exchanges plunged to a five-year low of around $567.8bn during 2009 from nearly $891.9bn during 2008.
The 2009 turnover was nearly half the value in 2007 and just over a third of the peak value of $1.59trn recorded in 2006, according to the joint Arab stock data base at the Abu Dhabi-based Arab Monetary Fund (AMF).
All 13 stock exchanges recorded a large fall in turnover last year but the bulk of the decline was in the bourses of the six-nation GCC given their relatively high capitalisation and value of traded shares.
"The main reasons for the decline in turnover in 2009 was the sharp fall in share prices in the first months of the year before they improved towards the end of the year," said Fadi Kiswani, a stockbroker at Al Sharhan Securities.
"The other two reasons are that investors remained wary and jittery most of the year and the stock markets were deprived from a main source of liquidity. I mean by this the banks, which were adopting a tight credit policy," he said.
A breakdown showed Abu Dhabi Securities Exchange (ADX) recorded the largest drop in turnover, which tumbled by a third last year.
In absolute value, Saudi Arabia was the biggest loser, with turnover at its Tadawul exchange plummeting by around $161bn, nearly half the total decline in the turnover of Arab markets, the figures showed.
Other key victims were the markets of Dubai, Kuwait, Qatar, Jordan, Egypt and Morocco while the remaining bourses were also losers albeit to a lesser extent.
The report showed Saudi Arabia by far remained the busiest market in the Middle East in terms of turnover, which stood at $322.4bn during 2009, more than half the total value of shares traded in the Arab region. Kuwait came second, followed by Egypt, Dubai, Qatar, Abu Dhabi and Morocco.
Despite the plunge in turnover, the combined Arab market capitalisation gained nearly $85bn at the end of 2009 compared to the previous year.
From around $805.5bn at the end of 2008, their capitalisation swelled to nearly $890bn towards the end of 2009. The increase followed a staggering decline of around $525bn in 2008 and a surge by nearly $458bn in 2007. A breakdown showed most of the markets ended the year as gainers, including Abu Dhabi, Saudi Arabia, Qatar, Oman, Lebanon, Egypt and Morocco.
Most of the exchanges also recorded a strong start in 2010, with the combined Arab market capitalisation rising by nearly $21bn in the first 11 days of the year, according to the AMF.
"It was a good start," Kiswani said. "2010 will be a much better year unless unexpected developments happen. Liquidity is improving and performance of listed companies is projected to be better this year."
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