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Mon 11 Jan 2010 10:06 AM

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GCC financial markets slip despite global growth

GCC records 22% growth for 2009, well below that of emerging markets - research.

As global markets generally ended the year on a positive note, most GCC markets sank into the red on the back of negative market and political news, according to the Kuwait Investment House 'Markaz' Global and Regional Market Review for December 2009.

The Markaz note indicated that UAE markets, still dealing with the Dubai World debt restructuring, ended December with a decline of almost 8 percent.

Saudi Arabia saw the highest gain of the year, ending December up 27 percent, while the MSCI GCC dropped nearly 2 percent for the month, bringing the total 2009 gain to 22%, well below emerging markets which were up 4% in December and 74% for 2009 (MSCI EM).

According to the Markaz report, investors remained cautious during 2009, in turn causing market to lag and ensuring that liquidity all but dried up on regional exchanges.

The value traded across the GCC shrank by 40% to $512 billion, which is below 2004 levels.

“The events of 2008/2009 have laid bare the GCC's frailties in the arenas which support market recovery, such as adequate corporate governance, regulatory structure, transparency, etc,” M R Raghu, head of research at Markaz, said in the research note.

“For the GCC, the economic outlook remains positive, corporate earnings are expected to show an overall growth of 6 percent in 2009, increasing to a 16 percent growth in 2010. However, there remain pockets of weakness across the peninsula, namely in real estate, banking, and the investment sectors.”

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