GCC stock markets lose $12b last month

25/06/2011 00:00 AST

Stock markets in the Gulf region lost momentum in May amid lack of market catalysts, light liquidity and rising political tensions in some Arab countries.

As a result, the combined market capitalisation of Gulf Cooperaction Council bourses lost $12.2 billion during the month to reach $757.9 billion, said a report published by Kuwait-based KAMCO Research.

This is despite the positive economic outlook driven by strong oil prices and significant increase in government capital expenditures.

The GCC bourses followed international markets which slumped amid concerns that the United States economic recovery is faltering and rising fears that Europe’s sovereign debt crisis will intensify and slow the global economic recovery, the reported noted.

The bourses were adversely impacted by the escalation in regional political tensions that suppressed investors’ sentiment which was reflected in lower level of trading activities across the board.

In its latest assessment of the Middle East and North Africa (Mena) region, the International Monetary Fund (IMF) has indicated that the whole region is going through a period of unprecedented change driven by the desire for greater political and economic freedom.

For the Gulf Cooperation Counci; states, real GDP growth is projected to reach 7.8 per cent in 2011 as oil prices remain strong and oil production expands to stabilise global oil supply in the face of supply disruption in Libya.

The strongest performer for 2011 is Qatar where real gross domestic product (GDP) is projected to expand by 20 per cent in 2011 underpinned by continued expansion in natural gas production and large investment expenditures by the government.

In Saudi Arabia, real GDP is expected to grow at 7.5 per cent in 2011, supported by massive government spending on infrastructure projects and development of real economic sectors.

In Kuwait, real GDP is projected to grow by 5.3 per cent in 2011, then 5.1 per cent in 2012 fuelled by strong oil prices and capital spending on infrastructure projects.

As for the banking sector, the backbone of GCC economies, most banks in the GCC region are set for slow recovery in 2011 amid sluggish credit growth and challenging funding conditions. Oman

Distorted investor sentiment and weak corporate performance dragged Muscat to the bottom of the GCC list. Poor corporate earnings shaped market performance in May as the Omani bourse failed to maintain the uptrend witnessed since March 2011 and ended as the worst performing market in the GCC region.

In May, MSM 30 Index fell down by 5.17 per cent as investors’ sentiment turned bearish in the market after the majority of companies, except banks, reported below than expected first quarter earnings.

Saudi Arabia
Pressure from banks and petrochemical stocks dragged down the whole market. Tadawul All Share Index (TASI) recorded a marginal gain of 0.38 per cent and closed the month at 6,735.98. Instability in the Mena region coupled with renewed concerns over the health of the global economy led investors to remain on the sidelines in May.

For more on this:

http://www.timesofoman.com/innercat.asp?detail=46833

Times of Oman