GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap4,040 1.47
Med Cap3,813 1.12
Small Cap4,857 0.75
Micro Cap8,140 0.78

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Ticker Price Volume
QNBK 127 470,450
ETISALAT 17.15 1,265,926
GFH 0.6
EMIRATESNBD 8 953,900
DAMAC 3.04 4,480,836
MMG 0
SABIC 102.33 6,566,984

The Week That Was

Source: NCB Capital

Banking on China

One of the great positive surprises of 2009 was the astounding ability of China to keep growing through the equivalent of an economic tsunami. Although initial signs pointed to a pronounced slowdown, growth quickly resumed in the spring. For advocates of the China story, this is yet further evidence of the extraordinary strength and resilience of the Asian giant, whereas skeptics have dismissed China’s performance as a government-engineered, politically motivated and ultimately unsustainable bubble. The truth, as usual, is likely to lie between these two extremes. Regardless of the causes of the turnaround, however, China is widely viewed as one of the bright spots of the global economy. Beijing’s ability to keep the story on track is of critical importance for the GCC, both through oil demand and price effects
and the impact on the US Dollar.


China has had a good crisis although it did not start out well. A 52.6% drop in exports from the precrisis levels was the sharpest in Asia, forcing an estimated 15% of export-oriented companies to cut their production by more than half, in some cases halting it altogether. As many as 20 million migrant workers returned to their villages. A substantial hit to GDP growth was widely expected but – even allowing for doubts about government statistics – the Red Dragon fought back with remarkable speed and determination. Almost echoing the spirit of the Communist command economy, the authorities adopted an exceptionally wide range of stimulus measures in a bid to return growth to their target levels.

The anti-crisis measures consisted above all of a massive RMB4trn stimulus package covering 2009-2010 and equaling some 12-13% of GDP. At the same time, the authorities gave the country’s dominant state-owned banks a determined nudge to accelerate lending. The effect was a vastly amplified stimulus. New bank loans issued last year totaled just short of RMB10trn, more than double the figure for 2008.

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