ME stock markets need to be more open - report

MORE TRANSPARENCY: The ME's stock markets need to be more open to attract future investors, says study. (Getty Images)

The Middle East’s capital markets need to be more transparency, with stronger corporate governance, according to a new report that analysed the region’s 14 stock exchanges.

The study by Grant Thornton International Ltd, a global accounting organisation, says the financial crisis has left international investors demanding greater openness.

And if the region wanted to benefit from the eventual recovery of the global economy then the transparency issue needed to be addressed, the report said, according to the Saudi Gazette.
 
“If governments in the region can drive forward corporate governance reforms and achieve greater transparency, the Middle East will be well placed to gather a larger slice of international capital markets activity when the global economy begins to recover,” said Carol Banford, Grant Thornton LLP’s managing partner of International services

“That means not only better corporate transparency but also more comprehensive disclosure by the exchanges, public sector bodies, regulators and governments,” she added.

The introduction of the Nilex exchange in Egypt was a good example of how the region’s exchanges were becoming more innovative, but they had to continue to innovate and provide better opportunities for medium-sized companies, Banford pointed out.

The region could also use the ongoing evolution of Islamic finance to help them weather the economic downturn, she added.

Collectively, the stock exchanges of the Middle East represent one of the largest emerging markets in the world, comparable to the national stock exchanges of Switzerland, Australia, Brazil or India.

The Saudi Arabian market (Tadawul) is the largest, accounting for approximately 40 percent of total market capitalisation during 2008.

The Dubai Financial Market (DFM), the Kuwait Stock Exchange (KSE) and the Cairo and Alexandria Stock Exchange (CASE) were all valued at over $100bn on an average monthly basis in 2008.

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