Financial markets in the UAE and other Gulf countries will benefit from stability and achieve gradual improvement in 2009, say experts.
They believe the circumstances that led to last year's drop in the value of the region's stocks differed from those that affected the United States, Europe and Asia – and this means the local stock exchanges could be the first to recover. The experts say the fact that the markets have lost a large percentage of their value has created a massive opportunity for investors. And they anticipate a return of liquidity and a rise in confidence levels.
"It was fear of the unknown and effects from outside that led to the decline in the performance of most financial markets in the
UAE and other Gulf countries in 2008," said Hussam Al Ameri, Chief Executive Officer of Abu Dhabi's Burooj Securities.
"The situation worsened further when foreign investors sold their investments in these markets to cover their exposure elsewhere. The fall of the
local and Gulf financial markets was not related to the fundamentals of these markets or the performance of listed companies. The psychological state prevalent in the local and Gulf markets was a result of the effects of the global financial crisis on many things, including investments. Investors and financial establishments are still hesitant about re-entering the stock markets."
Al Ameri was optimistic that local markets would recover faster than others because of such strengths as financial flexibility and
experience in crisis management. Also the markets had steered a large proportion of funds towards internal investment and ambitious infrastructure projects.
Mohammed Ali Yasin, CEO of Shuaa Securities, said 2009 would provide an opportunity for financial institutions to distribute their funds in a better way. "Markets need effective decision-making followed by clear executive action that eases the worries of investors and helps restore confidence. It is important that the banks return to their main role of providing liquidity for the economy. The drop in the market value of some shares listed on local financial markets to less than the book value provides an excellent investment opportunity."