Market cap of Arab bourses up 60% since March - UASE

HAPPY INVESTOR: Investors may be happy after recent gains on Arab bourses; but how long will the happiness last? (Getty Images)

The combined capitalisation of Arab stock markets has risen 60 percent to $960 billion from March, but it was still off last year's peak of $1.3 trillion, the Secretary General of the Union of Arab Stock Exchanges said on Sunday.

Fadi Khalaf, who is also the chairman of Beirut Stock Exchange, also called for better regulation and transparency levels to avert future downturns.

In March the total capitalisation of Arab bourses stood at $600 billion. In the past year, Arab markets underperformed other emerging markets but Khalaf believed they still offer opportunities.

"There are still good opportunities for investors who cannot find (them) in other emerging markets because they went too high too fast. Institutional investors now don't run after prices, they will wait for correction," Khalaf told reporters at a brokerages' seminar.

The Beirut-based UASE has 16 Arab countries as members. Algeria, Sudan and Mauritania are not members yet.

Khalaf cast doubt on whether Arab bourses would be linked up soon or consolidate in the near future.

"Linking Arab markets is difficult, before that many steps are needed. I hope in 10 years we can reach that," he said, adding that it should be done on a government level.

"I do not see it in the near future. We are far from realising it because there are differences in regulations and currencies."

Khalaf said regulation and transparency must improve.

"Transparency is a must for all markets and we must work to improve it. We need more and well-defined regulations to apply during crises," he said.

"We need to introduce circuit breaker systems for Arab markets when they face problems in trading volumes."

Circuit breakers are measures used by stock exchanges during large sell-offs to avoid panic selling.

He added that Arab stock markets will closely follow the performance of oil prices.

"With (the) oil price going higher, we will see our markets going up. Once oil, real estate and the financial sector get better, the performance of markets will be better because they are linked," Khalaf said. (Reuters)

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