GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap4,023 0.80
Med Cap3,850 0.49
Small Cap4,907 0.91
Micro Cap8,519 0.62

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Ticker Price Volume
GFH 0.46 3,578,848
BKSB 0.14 275,822
DSI 0.39 45,711,538
ALINMA 16.5 3,084,810
DAMAC 3.84 686,475
ALKHODARI 10.04 34,083
DANA 0.6 9,001,191

The Week That Was

Source: NCB Capital

Lessons of a crisis

In the GCC, the most severe global economic crisis of the postwar era has given rise to mixed emotions of apprehension and jubilation. While the seemingly impressive successes of diversification were quickly found to be insufficient defense in the face of the sharp oil price correction, the generally conservative stance of the region’s financial regulators stands broadly vindicated. In reality, however, the region’s resilience is in large part due to other factors as well. Most notably, the reasonably well managed and strategically anchored development boom on the back of the oil price rally during 2003-2008 gave regional financial institutions and investors opportunities at home. This spared them the false lure of sub-prime mortgages and other risky instruments elsewhere. At the same time, the relative underdevelopment (in terms of assets and liabilities as a percentage of GDP) of the regional financial sector protected the region from the excesses seen in the West.

GCC policymakers can point to a number of important successes during the current downturn. In particular, the commitment to macroeconomic stability left the regional governments well positioned by international standards, to intervene in a bid to support economic activity. During the adverse oil price shock of the late 1980s and the 1990s, economic policy came to be firmly anchored in longterm strategic considerations. At least until the inflationary burst of 2006-2008, the US Dollar pegs served as an important anchor for economic policy. Imbalances, when they emerged, were typically rectified at the earliest opportunity. While Western governments kept spending throughout the boom of this decade, the GCC governments took the opportunity to pay down debts accumulated during the era of low oil prices. They further invested the oil windfall in various reserves and government funds. This left the GCC authorities with considerable ammunition to face the challenges of the current downturn.

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