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A recent report by Al Arabiya Investment Company has revealed the impact of global indices on the behavior of GCC markets, which has become a hot topic in recent years. The market entry in a world index or its promotion in an emerging market is a guarantee of quality. Market.
According to the Mubasher report, the two most popular indices are the British FTSE and Morgan Stanley indices, the latter of course being more popular and more diversified in quantity, the market share of the index being its size, its importance, its quality and the type of foreign capital entering the market.
The report points out that most of the markets entered in the index become very sensitive to global influences, to the speed of entry and exit of foreign investors.
Did the report raise a question about the most important liquidity or market stability? Its clarity, transparency or locality and the culture of its traders remain dominant.
What happened in the United States and Qatar after joining FTSE and Morgan Stanley? What about the behavior of the two markets?
The report is a simple comparison of the scenario of each market, including the Kuwait market with the most important stocks entering the index, the descent, the increase and the amount of the spread. Although the behavior of the markets is different, but the figures will tell you the truth so that your expectations are in the logic. All figures are at the end of September 2018, excluding the October study on strained political conditions.
The United Arab Emirates and Dubai joined the FTSE index in September 2010 and the Morgan Stanley index in May 2014 after more than five attempts. Each time, the index refused to join the market before the promotion of June 2013.
The DFM index rose before Morgan & Stanley by 45% and the Abu Dhabi market by 35%.
The entry of the two markets did not have a significant impact on the FTSE index, the value of the trades or the rise in the index, but the entry of Morgan Stanley and both markets highest level since 2009.
In the FTSE index, the Dubai index was rated at the time of the announcement of the top promotion at the time of membership, but the rate of increase in the index was higher. index in the two periods of the same month (September 2010 and September 2009) was 14% and the volume before the actual entry abroad and before the rise is much higher In September 2010, less from September 2009 of 73%.
On the Morgan & Stanley index, the Dubai market has recorded a record 120% since the upgrade of the actual index entry in May 2014 and the Abu Dhabi market Dhabi at 40%.
After the effective entry of the MSCI index, the behavior of the markets, their actual interaction and the culture of their traders emerged: the Dubai market fluctuated a lot and lost 1460 points on a peak of 37% recorded during the months and one week of membership, before bouncing back and gaining 1,000 points by 27% The 1250 points dropped by 25% to close the year when it had almost started.
The most stable
The Abu Dhabi market is considered one of the Gulf's most stable and stable markets, with a rate of correction and volatility after joining the index of between 12% and 10%. Even at the height of the oil crisis, the Gulf markets were the lowest, dropping by only 5% in 2015. The market and its roots, no matter how the money income is generated.
The report says we can not deny the impact of long-term market entry: the Dubai market has risen 20% since the announcement of the Morgan Stanley upgrade and 50% since the announcement of the FTSE index. The Abu Dhabi market has grown 38% since the announcement of the FTSE and 70% since the announcement of Morgan Stanley.
In 2018, the liquidity of both markets is well below what it was at the peak of the indicators input, but its liquidity is very low, despite the gradual increase in market weight in the market. # 39; s index. Is the entry of foreign investors strategic and convinced of the strength of the economy of the region? Or their entry and exit more noticeable in the negative and positive events highlighted ?.
Qatar Market
Qatar's market is one of the highest value markets, as its publicly traded companies are relatively large and have sufficient cash to allow for rapid price increases.
The Qatar market was upgraded with the United Arab Emirates market at the same annual review of the Morgan & Stanley Index in June 2013, with a weighting of 58% for the United Arab Emirates market and 47% for the United Arab Emirates. % for the Qatar market. .
The index rose 12% from the beginning of 2013 to the announcement of the upgrade, and then to 46% between the announcement of the upgrade and the actual membership. It continued to grow until reaching its highest level since 2009 at 14350 points in 2014, a 53% increase since the upgrade decision.
The Qatar market does not differ much from the United Arab Emirates market in terms of index membership, but that makes more sense. After joining the market, they were corrected by 16% and then rebounded strongly up to 25%. They then returned in 2014 and closed in green of 18.4%. %
The value of the index was identical to that before the upgrade, but the situation on the Qatar market can no longer be judged because it is somewhat sensitive to the current political situation.
The Qatar market joined the FTSE index in September 2015 and, in fact, the entry of foreigners was made in September 2016. Between the two periods, the index dropped by 9% because it was the period of the oil price crisis.However, between May and August 2016, the index rose by 15% and further decreased the same month of its effective accession to the end of 2017, reaching its lowest value since 2011.
Saudi market
According to the most important report of the Gulf market, the Saudi market, the most realistic, the most transparent and the clearest, did not miss anything for the investors: it was revalued in the indices FTSE, Morgan Stanley and Standard & Poor & # 39; s. In 2019 alone.
The Kingdom has made considerable efforts to accelerate the change of these indicators and has made progress:
Authorized foreign investors are permitted to hold shares directly listed on the Saudi stock market, which increased by 18% in the first half of 2015. It has been added to the watch list for the FTSE.
2017: Enabling qualified foreign investors to participate in IPOs (the Saudi market is reputed to be one of the strongest IPO markets), in addition to the launch of IPOs. a parallel market for equities.
2018: The capital market authority has allowed foreign investors to hold up to 49% of the shares of one of the listed companies.
In the same year, the FTSE and Morgan Stanley indices were upgraded, the index rose 18% in the first half of 2018 and the market recorded record inflows of $ 3.5 billion. It is strange that the Saudi market is currently going through a period of sharp correction and behavior
GCC markets are being modernized as markets continue to progress from one promotion to another and are corrected. The market went from 8,500 points in July to 7,400 points in September, a decrease of 13%.
The report pointed out that although Saudi market conditions contribute more to the rise than market conditions at the time, the promotion of three indicators of the same year and high oil prices, but it is lower 4% in the third quarter of 2018 compared to the rise of Dubai under the same conditions, 24%, Abu Dhabi Qatar, 4%.
The report has raised several questions in the foreground: is the entry of foreign investors ahead of the index? Or just a simple correction and then go back? Will he have a share of the height equivalent to that of his brothers? If we calculate the average between them, it is possible that the rate of increase of the market is between 40 and 70%. Does this mean that the Saudi index is between 14,000 and 11,000 points, which levels in 2005? Or too exaggerated? Is the correction period considered very healthy to complete the surge in a healthy and logical way?
Kuwait Market
The Kuwaiti market is a very local market: nobody can deny that the market is full of attractive opportunities before joining an index, but its location and the difficulty of understanding its trade and behavior push foreign investors to question it. little.
The Kuwaiti market has been on the FTSE watch list since 2008 and has only been growing in 2017 after many reforms and changes made by the CMA, the stock market and investors.
The report states that it is expected that the impact of the upgrade will occur if they occur. Will they enter the markets of the region in the future as part of promoting the developed markets index? Or is it still a long way to go?
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News Report of the Day: The Mixed Effect of Gulf Market Membership to Global Indices – You can see the source of the original news from the following link: Direct (economy) and the site of the # 1 The unit declines all responsibility for the content of any news, but the responsibility lies with the original publisher.
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