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Taking Stock

20-TRE164-Trends Russia

Ranvir Nayar takes a closer look at how GCC’s stock markets are behaving

May 17, 2012 3:32 by

are projected to remain fairly stable at the $120 to $130 range. But the local stock markets are robust. The Dubai stock market is up nearly 24 percent from January 1 to April 24, and the Saudi Ara­bian stock index is higher by more than 17 percent in the same period. Kuwait is up by close to 9 percent, and even the troubled Bahraini index is up by 0.39 per­cent. The only exception here is Qatar, definitely the star economic performer of the GCC for 2012. The Qatari index is off by over 1.3 percent.

So what’s happening with local stock markets? Looking at the market per­formance, it looks like the GCC mar­kets are perhaps even more integrated with global (Western) bourses than the GCC economies. In 2011, and so far in 2012, the GCC stock market seems to be tracking economic realities of the broader world, and, more crucially, the eurozone, rather than the economic data coming from the GCC countries themselves.

This kind of behaviour is not unique to the GCC stock markets. As the global economies integrate and trade more with each other, they would definitely be im­pacted by events in other leading econo­mies as well. As a result, GCC markets, pretty much like the rest of the world, are hurt by the weak economic data coming from the eurozone, which is still mired in the worst recession and financial crisis for more than 70 years.

This has its own drawbacks for the local bourses and companies.

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