The capitalization of 13 Arab bourses plunged from $991 billion on Jan. 25, when mass protests against President Hosni Mubarak began, to $942 billion at the end of January, Agence France Presse quoted a KAMCO report as saying.

Most of the decline came from Gulf stock markets, which dropped $32 billion in value to $750 billion, with the Saudi bourse — the largest in the Arab world — diving $21 billion.

The Egyptian stock market lost $12 billion in the first two days of the protests before it was closed, the report said.

The main Egyptian share market index has dropped more than 21 percent since the start of the year and financial markets have now been shut for the last five working days.

Fund managers are now hoping they can cut losses once the market reopens. Egypt's stock exchange is due to reopen Monday provided banks are operating smoothly, its chairman was quoted by Reuters as saying.

Egypt's stock exchange will cut trading hours to three from the normal four when it reopens next week, the official state news agency MENA said Thursday.

KAMCO attributed the losses to fear among investors that the protests in Egypt and, earlier, Tunisia could spread to other countries in the region and trigger a flight of capital.

"Protests have caused a state of random sell-off at some bourses," KAMCO said.

Prior to the unrest, Arab stock markets had been recovering losses sustained during the global economic crisis, gaining more than $100 billion in value last year, the report said.

“These are sharp drops and reflect the fact that investor risk perceptions have changed quite significantly. The optimism that appeared in the wake of the Dubai World deal and the oil price rebound is largely gone. The main concern now is that the environment of potentially drawn-out uncertainty will act as a drag on the markets and prevent the long-awaited rebound that the economic fundamentals and market valuations would otherwise justify. The whole thing has something of a deja-vu feel, reminding us of how the regional debt restructuring woes caused the Gulf bourses to underperform their emerging market peers,” said Jarmo T. Kotilaine, chief economist at the National Commercial Bank.

The Global Investment House (Global) said in its recent report that market capitalization for the GCC markets stood at $750.2 billion in 2010, an increase of 11.47 percent compared to the previous year. The Saudi Market constituted 47 percent of the aggregate market capitalization of GCC stock markets, followed by the Kuwaiti market with its capitalization accounting for 17.16 percent.

According to a recent report of the Saudi stock exchange, Tadawul’s total equity market capitalization at the end of January reached SR1.28 trillion, decreasing by 3.71 percent over the previous month. The total value of shares traded in January reached SR 83.81 billion, increasing by 28.18 percent over the previous month.

A regional financial expert, who wants to remain anonymous, is not very hopeful about the GCC markets. He said the market sentiments will remain volatile in the near term on the back of investor concerns over contagion effect from Egypt to the GCC.