Arab stocks drop $63bn in August

Arab stock markets plunged by more than $63 billion (Dh231.2bn) in August to record their worst monthly performance in nearly two years, official figures show.

Except for Saudi Arabia, the bourses of the UAE and its partners in the Gulf Co-operation Council (GCC) were the main victim of Black August as their market capitalisation collapsed by more than $44bn.

A decline in leading shares caused by foreign sell-offs and a host of other factors depressed the combined Arab market capitalisation by $63.2bn to $1.2 trillion on August 28 from $1.3trn on August 1, according to the Arab Stock Data Base at Abu Dhabi Arab Monetary Fund.

It was the biggest monthly paper loss in the Arab equity investors in two years and it followed sharp fluctuations in the previous months.

Standing at $1.2trn at the start of the year, the combined Arab market capitalisation rocketed to $1.3trn at the end of February after many listed companies in the region reported a sharp growth in 2007 profits.

The level then dipped to $1.3trn at the end of March before surging back to $1.3trn at the end of April following good quarterly results. It receded to $1.3trn at the end of May but rebounded to $1.3trn at the end of June before diving to $1.3trn at the end of July.

"You can say August was not one of the best months for Gulf markets," said Ziad Dabbas, Share dealing adviser at the National Bank of Abu Dhabi.

"But considering the big gains early this year, the decline was only a paper loss and the market could recover in the next period."

The figures showed Abu Dhabi's bourse was the worst hit in August, with its market capitalisation collapsing by nearly $15bn to $111bn from $126bn although it remains a gainer compared to the beginning of 2008.

Dubai was another main victim, plummeting by nearly $11bn to $125bn from $136bn. This means the combined loss in the UAE bourses was around $26bn, nearly 41 per cent of the total Arab market losses in August.

Qatar's Doha Securities Market tumbled by nearly $12bn, while Kuwait, the second largest single bourse in the Middle East, shrank by $9bn. Bahrain and Oman also recorded declines in market capitalisation this month. Egypt's bourse was the biggest loser outside the Gulf, plunging by nearly $14bn, while there was a combined loss of $5.5bn in Jordan and Lebanon.

Saudi Arabia's Tadawul was the one odd out, recovering by $6bn this month.