Arab Stock Markets – Week in Review

Moderate declines at exchanges regionwide between March 9 and 14

Arab stock markets retreated slightly last week

Benchmark indices of Arab stock exchanges retreated in the trading week between March 9 and March 14. Both markets in the United Arab Emirates shed around 150 points between the week’s first opening and last close, translating into a 3 percent softening for the Abu Dhabi Exchange (ADX) and around 4 percent for the Dubai Financial Market (DFM). This scaled the year-to-date gains for DFM and ADX back to 19.55 and 12 percent, respectively.

Where the ADX and DFM displayed index losses in the first part of the trading week, the Gulf Cooperation Council’s northern pair, Bourse Bahrain (BB) and Kuwait Stock Exchange (KSE), gained a bit each. The BB Index kept the pace and closed the week with a fractional gain of all of a point-and-a-half, or 0.4 percent. The KSE benchmark dropped 53 points, or 0.7 percent.

[pullquote] Saudi’s 1.5 percent gain was the best in the Gulf and also took the exchange to a new five-year high [/pullquote]

Oman’s MSM index fell 0.8 percent and Qatar’s QE index 2.1 percent, leaving it up to the GCC’s largest market to make the biggest positive impression for the week. The Saudi Stock Exchange’s TASI did so by climbing 137 points (and change) between market opening on March 9 and market close on March 13. The 1.5 percent gain was the best in the Gulf for the period and took the Saudi exchange to a new five-year high when the index peaked, intraday, above 9,400 points.

From North Africa and the Levant, the trumpets were keeping silent. Jordan’s ASE Index fell 0.3 percent while Morocco’s MASI rose 0.2 percent. Both are in 5-percentish positive territory for the year to date. So is the Tunindex which showed the Tunis Stock Exchange pass through a slight weekly dip and come out of it with a 0.2 percent drop for the March 10 to 14 period.

Even in Lebanon, where the compulsively quarreling political classes managed to produce another absurdity in the inability to draft an acceptable policy statement for the cabinet, the BLOM Stock Index stayed calm – meaning minimal trading activity and an index movement of breath-freezing 2.49 points. That represents a 0.2 percent drop, perfectly in tune with the small North African markets.

Cairo, however, played differently. The EGX 30 index of the Egyptian Stock Market was not contented with frustratingly insignificant moves but rather pushed up almost 200 points, or 1.1 percent. This resulted in a rise above 8,000 points for the Egyptian bourse and a year-to-date gain of just over 20 percent.

[pullquote] Small losses of Arab indices seem like nothing when compared with the sound of panic across the developed and the most-prominent emerging markets [/pullquote]

The double digit year-to-date gains of the EGX, DFM, ADX and TASI range between 20.08 and 10.3 percent. None of these markets made a great leap when compared with a week ago – but this rate of increase looks actually quite sweet right now in international context. That is because the mellow gains and small losses of GCC indices since March 9 seem like nothing when compared with the sudden sound of limited but contagious panic across the developed and the most-prominent emerging markets.

One of the worst hit markets this week was the Moscow Stock Exchange, owing to nervousness over the Crimean crisis and to fear of European sanctions against Russia in case of an escalating confrontation. The same crisis made bullish feelings turn to jelly beans in developed markets.

To name just two, Germany’s DAX dipped below the 9,000 points line on March 13, before rallying on Friday. And the S&P 500 in almighty New York suffered retreat from a five-year high achieved on March 7.

The downward pressure also showed in Japan, elsewhere in Asia and in Latin America. Mainland China indices in Shanghai and Shenzhen were stable for the week but the country acted as worry booster. Weak Chinese economic data and lower than expected growth targets contributed to drive global market sentiments south but better than expected labor and consumer economy data from the United States apparently did not.

Last week we discussed how long the developed markets could continue to grow, after five years of growth. Indications this week suggested perhaps not that long.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.