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02 October 2023

Arab markets lose $111bn in 2011

By Nadim Kawach

Political upheaval in the Middle East and North Africa allied with global financial turmoil to depress the Arab stock markets to their lowest level in six years through 2011 and all but Qatar’s bourse recorded downturns.

The combined market capitalisation of the region’s official stock exchanges crashed by nearly $111.7 billion in 2011 to its lowest point since 2005 and one of its lowest levels since fragile oil prices began their climb in 2000.

The large decline was in sharp contrast with most of the region’s economies, which are projected to have recorded relatively high growth rates due to strong crude prices and a sharp rise in public spending in some members.

Saudi Arabia’s Tadawul, by far the Arab world’s largest equity market, Kuwait and Egypt’s bourse were the main victims as they accounted for more than 70 the total loss in the region’s market capitalisation.

From around $991.5bn at the end of 2010, the collective Arab market capitalization dived to nearly $879.8bn towards the end of 2011, a total loss of about $111.7bn and an average loss of nearly 440 million a day, according to the Abu Dhabi-based Arab Monetary Fund (AMF), a key Arab League establishment which tracks the movement of regional bourses.

Egypt’s bourse, hit by domestic unrest, tumbled by nearly $33 billion while Tadawul lost around $25bn and Kuwait nearly $22bn. At $80bn, the combined loss of the three markets accounted for nearly 72 per cent of the total Arab bourse decline.

Abu Dhabi and Dubai shrank by nearly $6bn and $5bn respectively while Bahraini and Omani bourse receded by nearly $3bn each. Qatar emerged as the one odd out in the Gulf and the whole Arab World, with its market gaining nearly $2.4bn through 2011.

Outside the oil-rich Gulf, Jordan’s bourse shed around $4bn while there was a fall of nearly $2bn in Lebanon, $7bn in Morocco, $2bn in Tunisia and $1.2bn in the Palestinian market. The AMF gave no 2010 figures for Damascus as it was listed in early 2011 but the report showed the market has steadily declined since the current unrest erupted nine months ago to reach around $1.7bn.

“Market fundamentals say that the stock markets in most Arab countries should perform better in 2011 because of relatively good corporate profits, high oil prices and strong performance of most regional economies,” said Jamal Ajjaj, an analyst at the Sharjah-based Al-Sharhan Securities.

“But it was psychology….fear appears to have gripped local and foreign investors because of the global economic downturn and the Arab unrest…otherwise, Arab markets could have performed very well.”

The AMF report showed the combined turnover in Arab markets, the value of traded shares, also plunged to one of its lowest levels in 10 years to around$328 billion in 2011 from $348 billion in 2010 despite a surge in the value of shares traded in Saudi Arabia’s bourse.

Turnover in Tadawul leaped to $247bn in 2011 from around $192 billion in 2010 but there was a decline in most other bourses, mainly Kuwait where turnover collapsed to $18.6bn from $42.7bn.

Turnover in Dubai and Abu Dhabi also dived to $8bn from $18.4bn and to $6.1bn from $9.1bn respectively.

Turnover in Qatar remained almost unchanged at $17.9bn while in Egypt it plummeted to $16.9bn from $36.9bn.

The figures showed the combined Arab market capitalization peaked at all-time high of $1.33 trillion at the end of 2007 before collapsing to $805bn at the end of 2008 because of the global fiscal distress. It rebounded to $887bn at the end of 2009 and continued its climb through 2010 before it suffered a setback in 2011.

Aprox market cap of key Arab bourses                            

($bn)      End 2010        end 2011

Dubai         54.7             49.5

AUH           71.2              65.8

KSA            353.4            328

Kuwait       124.9           102.7

Qatar          123.3           125.7

Bahrain       19.9             17

Oman          21.7             18.8

Egypt            85.7            52.4

Morocco      69               62

Jordan          30.9            26.7

Lebanon        18.2           15.4

Total Arab      991.5        679.8

*Source: AMF