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27 February 2024

Common market to boost activity in bourses

By Staff Writer



Bourse and chamber officials from the six-nation Gulf Cooperation Council (GCC) will converge on Abu Dhabi in March to discuss the impact of the creation of a common Gulf market on regional stock exchanges.

Although the common market stipulates more access by GCC citizens to regional bourses, experts believe this will increase market activity but do not expect a boom in the early stages of the project, which was launched on January 1.

The March 10-11 GCC stock markets symposium is the third to be organised by regional bourses and chambers of commerce and industry. The first two have been held in Riyadh over the past two years.

But the Abu Dhabi meeting is the first since GCC countries launched their landmark common market scheme at the start of this year to cap years of negotiations for a full economic integration, which also involves putting in place a European Union-style Monetary Union by the end of 2010.

“The meeting in Abu Dhabi is part of a series of conferences and events aimed at supporting the GCC common market,” said Abdul Rahim Naqi, Secretary-General of the Union of GCC Chambers of Commerce and Industry.

“Since the common market gives equal opportunities to all GCC citizens in share owning and dealing, we have decided to meet to discuss the future of our stock markets, which will be positively affected by the common market… we expect the common market to give a strong push to movement of capital within the GCC without any curbs or obstacles,” he said in a statement on Tuesday.

He said the two-day conference would attract scores of experts and officials from the stock markets and chambers in the GCC and other countries.

“It will focus on the performance of the GCC stock markets in recent years and prospects for their performance in a common market… one important topic is the unification of all legislation and rules in GCC stock exchanges.”

Bourse dealers said a common market would naturally boost activity in GCC exchanges but added this would take time.

“In principle, GCC bourses will perform better and activity will increase but we should not rush and say there will be a boom… we are still at the start of the common market and we have to wait and see,” said Mohammed Yassin, general manager of the Emirates Securities company, a leading Abu Dhabi stockbroker.

“We have to wait for decrees by the GCC heads of state to open up the bourses for GCC citizens… but don’t forget many companies in the UAE and other GCC countries already allow other investors to own their shares… I am optimistic about the impact of the common market but not excessively optimistic. Another effect is that the process could give a bigger access to foreign investors in GCC shares and this will in turn expand activity in the bourses.”

More than 640 companies trade their shares in the GCC bourses, with their combined market capitalisation standing at nearly $1.15 trillion (Dh4.2trn) on Tuesday.

Saudi Arabia remains by far the largest bourse, with a capitalisation of around $540 billion. The UAE is second, with the combined capitalisation of its two main bourses in Abu Dhabi and Dubai standing at a total of $260.3 billion.