Saudis, Kuwait dominate Arab share trading

Saudi Arabia and Kuwait have remained the dominant powers in the Arab stock markets, handling more than 90 per cent of the total share dealing and accounting for nearly 60 per cent of the overall market capitalisation, according to official figures.

The daily turnover in the stock markets of the two Gulf Countries averaged around $1.098 billion in June while the total value of the traded shares in the Arab region's 14 stock exchanges stood at nearly $1.17 billion, showed the figures by the Abu Dhabi-based Arab Monetary Fund, which tracks regional shares.

Turnover in Saudi Arabia alone averaged around $781.8 billion, more than 66 percent of the total value of shares traded in the region.

Other markets

"Saudi Arabia and Kuwait account for the bulk of share activity in the Arab region because of the strong interest in such investment and wide spread speculation…. this trend is hardly existent in other Arab markets, where there is a general tendency for long term investment," said Jassim Al Saadoun, a Kuwaiti economist and stock broker.

Dealers said turnover, the value of traded shares, had sharply increased in Saudi Arabia, Kuwait and most other Arab markets overt the past few months because of low interest rates and the absence of other major investment opportunities in the region.

On a monthly basis, turnover in Saudi Arabia stood at around 20.3 billion in June while it was estimated at $6.9 billion in Kuwait. Their combined value accounted for nearly 93 per cent of the total Arab stock turnover of nearly $29 billion in June.

Egypt had the third highest daily turnover in the region, standing at around $38.6 million. It was estimated at around $14 million in Qatar, $10.3 million in Jordan, seven million in Oman, 3.1 million in Abu Dhabi and $1.5 million in Dubai.

Kuwait topped the list in terms of the number of traded shares, with a daily average of around 5.88 billion shares in June. The figure accounted for nearly 85 per cent of the total number of shares of 6.9 billion traded in the Arab world.

The number of traded shares stood at 613 million in Saudi Arabia, 145 million in Egypt, 102 million in Jordan, 49 million in Sudan and 33 million in the UAE.

Dealers attributed the high amount of traded shares in Kuwait to the low face value of the shares of most listed companies compared to other stock markets in the region. Some shares do not exceed $three while they could be as high as $30 in the UAE.

Saudi Arabia also has the biggest stock market in the Middle East in terms of capitalisation, which peaked at around $127.2 billion at the end of June. It was followed by Kuwait's capitalisation of $48.3 billion.

Their combined capitalisation amounted to nearly 60 per cent of the total Arab market capitalisation of $288.6 billion at the end of June.

Share-dealing in Saudi Arabia, the world's oil superpower, is set to surge as more companies are expected to join the market when the Kingdom creates its first official stocks exchange following the government's approval of the project.

Advanced network

Dealing in Saudi Arabia is currently conducted through an advanced bank network after its formal floor was shut down just after it was launched during the 1980s because of reservations by some groups on the grounds share trading is usury.

The AMF figures showed an increase in the stock index of all Arab markets, indicating strong performance by the listed companies and a better economic year.

The index for Abu Dhabi market rose from 1,366.03 at the end of 2002 to 1,452.60 points at the end of June. It also soared from 2,518.08 to 3,612.89 in Saudi Arabia, from 2,375.30 to 3,590.50 in Kuwait, from 1,821.49 to 1,953.43 in Bahrain, from 191.86 to 238.31 in Oman, and from 2,323.84 to 3,189.48 in Qatar.

The report showed Egypt by far had the highest number of trading companies, standing at 1,122 at the end of June. They accounted for nearly 60 per cent of the total listed firms in the 14 Arab markets. Jordan had the second biggest number of 159, following by Oman with 136 and Kuwait which had 101 companies at the end of June.