Markets | Market capitalization of Arab inventory markets to exceed $4.5trn in 2023.

Markets | Market capitalization of Arab inventory markets to exceed $4.5trn in 2023.

Within the sphere of Arab monetary markets, the yr 2023 noticed important developments. The annual report issued by the Union of Arab Securities Authorities highlights a number of vital factors:

Enchancment in inventory costs

Business inventory costs rose considerably in regional markets, particularly over the past two months of final yr. The rise was fueled by expectations that central banks will begin chopping rates of interest in 2024, responding to easing inflationary pressures around the globe.

World and regional advantages

Key indicators for each world and regional markets are anticipated to realize greater than 10% throughout 2023. This optimistic development displays rising confidence within the imaginative and prescient of decision-makers and their means to implement insurance policies that mitigate the financial downturn.

Sturdy efficiency

Arab monetary markets, significantly within the Gulf international locations, attracted further capital via profitable choices in 2023. This influx boosted buying and selling exercise and boosted total efficiency.

Difficult begin

Arab markets confronted a shaky begin resulting from troublesome situations within the first 5 months. Notably, the Arab Customary & Poor’s Composite Index fell by 4.1 p.c in February. The index measures the efficiency of 11 markets, together with Egypt, Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Jordan and Tunisia.

Surelobal impact

Initially of the yr, the downturn prolonged past Arab markets, affecting world counterparts. Considerations over the tight financial coverage of the US Federal Reserve, together with rate of interest hikes, led to market volatility.

Resilience between losses

Regardless of sharp losses in shares and monetary bonds in the USA, Europe and Asia, regional markets edged up 0.9 p.c within the third week of this month.

Positivity on the finish of the yr

Arab monetary markets ended the yr on a optimistic notice. Notably, November and December recorded spectacular efficiency beneficial properties of 5% and seven% respectively. The development was pushed by expectations that rates of interest have been on the rise, coinciding with a decline in US inflation.

Market capitalization

In December 2023, the mixed market capitalization of Arab inventory markets reached $4.5trn, marking a 12.2% enhance in comparison with its worth on the finish of December 2022. A 14% enhance to $3.002trn in 2023 (up from $2.6trn final yr).

Egyptian Alternate

The Egyptian alternate noticed substantial development, with traded shares recording a major enhance of 95.8 p.c, reaching $110.7 billion. That is about 17% of the overall commerce worth within the area. This enhance was influenced by the rise in buying and selling worth within the Egyptian market following the graduation of treasury invoice buying and selling.

MSCI Rising Markets Index

The Morgan Stanley MSCI Rising Markets Index highlighted the spectacular efficiency of the Egyptian inventory alternate, which improved 41.8 p.c over the previous yr (in comparison with a 22.5 p.c decline the earlier yr). The index covers the big and mid-cap sectors, which characterize about 85% of every nation’s inventory market.

Market efficiency in Morocco and Lebanon

In 2023, Morocco noticed a major enchancment, with its index growing by 22.8 p.c in comparison with the earlier yr’s unfavourable efficiency of 31.6 p.c. In the meantime, Lebanon’s index closed the yr with a formidable achieve of 47.4 p.c, after an excellent larger achieve of 85.5 p.c in 2022.

Sector error.

The report highlighted that the power sector has the most important share of market capitalization amongst different financial sectors within the area, accounting for 50.9 p.c of the overall market capitalization. This was adopted by the monetary sector with 16.8 p.c, whereas the patron sector got here third with 8.7 p.c, adopted by the essential supplies sector with 6.1 p.c of the overall market worth.

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