Arab markets fluctuated but made investors richer by $31bn in two months

Dealers expect another year of good performance in most regional markets but did not rule out sharp fluctuations because of widespread speculation. Kuwait, Qatar and Egypt were the star performers during January and February, while Saudi Arabia, Morocco and Abu Dhabi were the main losers.

Despite a sharp fall in the capitalisation of Saudi and Moroccan markets, the hectic increase in Kuwait, Qatar and Egypt lifted the combined Arab market capitalisation to around $1.396 trillion at the start of March from $1.338trn at the end of 2007, the Abu Dhabi-based Arab Monetary Fund (AMF) said in its daily report on the region’s 15 formal bourses.

Kuwait, one of the most speculative bourses in the Middle East, accounted for the bulk of the increase, with its market capitalisation soaring to $213.9bn at the start of March from $135bn at the end of 2007.

Qatar’s Doha securities market shot up to $111bn from $95.5bn and Egypt’s Cairo and Alexandria stock markets to $157bn from $138.8bn.

In contrast, Saudi Arabia, the Middle East’s largest stock market, recorded a sharp drop in capitalisation to $483bn at the start of March from $518.9bn at the end of last year. Morocco’s Casablanca Exchange also tumbled to $21.2bn from $75.5bn.

The report by the AMF, the Arab League’s main financial institution, showed there were modest increases in the markets of Dubai, Lebanon, Oman, Palestine, Bahrain and Jordan while there was a slight drop in Tunisia. “So far the performance of Arab bourses is good and the market basics indicate a good performance through the year,” said Malick Yunus, an economist at the Saudi National Commercial Bank. “But, of course, you cannot rule out fluctuations in some markets that are dominated by speculation.”

The report showed Saudi Arabia remained by far the largest market in the Arab world at the start of March in terms of capitalisation, which accounted for 32.2 per cent of the total Arab capitalisation. The UAE came second, with 18.7 per cent, followed by Kuwait, with 15.6 per cent and Egypt with 11.5 per cent.