Erratic mood of investors grips Arab bourses in 2008 |
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For most Arab stock markets, 2007 was a year of relative stability and growth. For all of them, 2008 has been a year of erratic behaviour.
Through the first eight months of 2007, most Arab markets recorded steady growth except for quiet daily shakes in some bourses. But by the end of the year, their combined capitalisation has gained a staggering $450 billion (Dh1.65bn).
As the eighth month of 2008 draws to a close, strong tremors continued to jolt most markets, with the Gulf bourses emerging as the most erratic. The fluctuations have been so violent this year that some exchanges lost billions of dollars in just one session. The sharp changes, some times in one session or one day and some times in one week or one month, have only added to the confusion of analysts, who instead of keeping quiet, let loose their imagination and started to unleash barrages of explanations and justifications.
"One foreign stockbroker told me one day the mood is bullish in Abu Dhabi market and two days later he told me the mood is bearish," said Abdullah Zaabi, an Abu Dhabi stocks investor. "I didn't know what he meant by these two words, but I think we listen much to rumours and to so-called analysts."
Official data showed the sentiment in most Arab markets has been a mixture of both bearish (negative) and bullish (positive) in most of the trading days. While most regional bourses suffered from heavy losses during June and July, many of them have emerged as gainers so far this year, according to the Arab stocks database at the Abu Dhabi-based Arab Monetary Fund. By August 20, the bourses of Abu Dhabi, Oman, Bahrain, Qatar, Tunisia, Palestine, Morocco and Jordan were gainers in terms of capitalisation, while those of Dubai, Saudi Arabia, Kuwait and Egypt were losers.
As a whole, the Arab region was a winner. The combined market capitalisation of its bourses gained nearly $70bn as it stood at nearly $1.36 trillion on August 20 compared with around $1.28trn in January.
In the gainers club, Morocco and Qatar were the stars, adding nearly $65bn and $34bn respectively. In the losers league, Egypt and Saudi Arabia were the main victims, diving by around $27bn and $20bn respectively.
The combined Arab capitalisation itself has sharply fluctuated through the year, soaring from around $1.28trn at the start of January to $1.37trn at the start of February. It tumbled to $1.31trn a month later and surged again to $1.42trn at the end of April. At the end of May, it slipped to nearly $1.41trn and surged again to $1.43trn at the end of June. It receded to $141trn at the end of July and plummeted to $1.35trn on August 20.
Turnover has also sharply fluctuated, peaking at $117bn in January before falling to $95bn in February and $78bn in March. It recovered to around $86bn each in April and May before leaping to $107bn in June. In July, the value of traded shares dived to $74bn and slipped again to only $30bn during the first three weeks of August.
In contrast, the capitalisation of most regional bourses recorded a steady growth in most months of 2007, with the capital leaping from around $888bn at the start of January to $1.04bn at the end of March. It continued its rapid climb to reach nearly $1.25trn at the end of June and $1.31trn at the end of September before peaking at $1.3trn at the end of the year.
Analysts have cited many reasons for the market instability through 2008, including persistent foreign sell-offs, regional tensions, global market turmoil, widespread rumours, and new regulations in some bourses.
According to the Omani Alwatan Arabic language daily, market dealers and analysts are to blame for the rumours. "There has been a large increase in the number of so-called market analysts in Oman and other Gulf states in the recent period," the daily said.
"Many publications are now carrying daily analysis by unidentified experts and analysts. This is creating a gloomy and destabilising mood in the markets."
By Nadim Kawach
© Emirates Business 24/7 2008
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