JEDDAH, 24 January 2006 — The Gulf Cooperation Council (GCC) stock markets enjoyed good growth last year led by Saudi Arabia which reported yearly growth of 103.66 percent. The United Arab Emirates (UAE) and Qatar bourses also recorded strong yearly growth of 102.9 percent and 83.45 percent respectively. Kuwait’s stock index gained 66.4 percent. Bahrain and Oman seem to have underperformed only when compared to the other GCC countries, however they still recorded a good yearly growth of 23.70 percent and 44.4 percent respectively in 2005.

The year 2005 was marked by some high-profile listings which coupled with strong gains in stock prices. The combined GCC market capitalization breached the $1-trillion mark in 2005, according to a report by the Kuwait-based Global Investment House (Global).

The strong gains came amidst a string of strong corporate performances, abundant liquidity due to high oil prices, strong macroeconomic growth and positive business and consumer confidence which helped to increase in the investors’ interest which reflected in the surge in trading volumes in all the markets.

However, investors now seem to be waiting for the announcements of 2005 results which will dictate the future direction of these markets.

“Investors’ confidence seems to be strong and the trading activity to pick-up in the coming months on the back of continued positive momentum in corporate earnings,” Global report said.

Capital markets have been an important engine for growth in the GCC countries. As a result, GCC capital markets have come a long way in the last 6 years with their role of resource mobilization.

The strong growth in the capital markets in the last three years is the result of liquidity and the fundamentals and structural changes in the economies which drove GCC stock markets further. In the last two years, the GCC economies have done a commendable job in diversifying their economies away from oil and at the same time they have been opening up sectors such as banking, infrastructure and real estate. But with liquidity in the markets improving substantially, the capital markets are also witnessing increased depths, both in terms of the number of listed companies as well as market capitalization. As a result, companies are witnessing good earnings momentum, which is likely to be sustained on the back of buoyant economy and tremendous business opportunities in the region.

The market capitalization of the GCC market, which was around $120 billion in 2000, has catapulted to reach $1,136.6 billion in 2005. This represents a growth of 844.2 percent within a period of five years. The market capitalization has more than doubled in 2005 as compared to the year 2004, from $524.9 billion to $1,136.6 billion. The market capitalization of the Saudi market increased to $645.9 billion which represented around 56.8 percent of the total GCC market capitalization.

The aggregate volume of the shares traded on the GCC exchanges rose from 7.9 billion shares in the year 2000 to a mammoth 100.69 billion shares in 2005, an increase of about 100 percent compared to 50.9 billion shares traded in 2004. The cumulative value of the shares traded on the GCC exchanges also increased from $551.9 billion in 2004 to $1,374.0 billion in 2005, an increase of 148.9 percent.

The capital markets observed improved primary market activity, which increased the number of companies listed on the GCC stock exchanges from 492 at the end of 2004 to 579 in 2005.

The Global report said that the GCC region is also witnessing a change in the regulatory framework with the supervisory institutions introducing new capital market laws to improve the investment climate in their respective countries.

Furthermore, the situation is ripe for additional listings in the coming year and family businesses may also jump on the listing bandwagon, especially in the face of changes brought about by globalization. A number of family businesses are already in the process of going public. In Saudi Arabia as many as 40 non-listed joint-stock companies, which require about $9.33 billion in capital funds from the market, have announced their plans of going public in 2006.