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Arab markets decline 10% during Jan - report

After declining nearly 55 percent in 2008, the MSCI Arabian Markets Index ended January with a further 10 percent loss, according to Dubai-based investment bank Rasmala.

The UAE markets lost 10 percent over the month as signs continued to show deteriorating fundamentals in the real estate sector, while concerns over credit quality (both consumer and real estate related) worried investors.
On the Dubai Financial Market (DFM), the real estate sector dominated losses, with stocks such as Emaar and Union Properties losing between 10-15 percent of their value respectively.

Unlike other markets in the region, the banking sector in Dubai supported the market, with the shares of Dubai Islamic Bank and Emirates NBD ending the month with gains of between 6-8 percent respectively.

Qatar was the worst performer for the month in the GCC with losses of 23 percent in January.

Renewed banking sector concerns throughout the region, combined with the sector's 51 percent weighting in the Qatar index, were the main reasons for the underperformance.

Saudi Arabia was the top-performing large market in the region. The Tadawul had gained 11 percent by mid-January, only to give back most of the gains as poor company earnings dampened sentiment.

The Saudi market ended the month with a minimal gain of 0.12 percent. The market was very volatile during the month as equity prices were heavily affected by the preliminary reporting of 2008 results.

The Kuwait Stock Exchange ended the first month of the year with a 13 percent loss, led by investment companies such as Global Investment House and Investment Dar, both of which lost nearly 55 percent of their value.

Oman, the smallest GCC market ended this month with a loss of 11.5 percent. Losses were spread across the market, with the largest coming from the industrial sector where Al Jazeera Steel and Oman Cables lost 54 percent and 43 percent of their value, respectively.

The Bahrain market declined 8.2 percent in January after being heavily impacted by the performance of the banking sector.

Looking forward, Rasmala said the intermediate-term volatility should persist as investors digest earnings reports.

However, as the market assesses the full impact of the global economic environment on regional companies, the investment bank expects to see some support for equity markets in the second quarter.

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