Dubai: Ramadan is an uplifting time for stock markets in predominantly Muslim countries, according to a new study.
Stock markets in Oman, Turkey, Kuwait, United Arab Emirates, Qatar, Pakistan, Jordan, Egypt, Morocco, Tunisia, Malaysia, Bahrain, Indonesia and Saudi Arabia generated average returns of 38 per cent during Ramadan over the years 1989 through 2007, according to the report compared with their average 4.3 per cent returns the rest of the year.
Ahmad Etebari, a professor of finance at the University of New Hampshire in Durham, who was lead researcher on the study, said he was surprised by the finding.
"I expected to see the opposite," said Etebari, who was born in Iran.
Etebari found that the markets he analysed performed strongly, regardless of the timing of Ramadan.
Etebari concluded that the rally resulted from greater optimism during Ramadan. "This is behavioural," Etebari said. "It stems from psychology."
Observance of Ramadan is expected to start on or about August 11 and finish on or about September 10.
In the Middle East, Dubai's main index and Abu Dhabi's benchmark are both down so far this year, while stocks in Indonesia, an officially secular country that has the world's largest Muslim population, are up about 20 per cent.
"The implication of our find for investors is obvious," Etebari said. "Investors seeking fast profits in the Muslim world should try to profit from the fast."
