All Gulf Cooperation Council (GCC) markets ended on a lower note in 2011, barring the Qatari market that managed to inch marginally higher, adding 1.12 percent in annual gains by the end of 2011.
Despite the global financial crisis, Qatar has prospered in the last several years. International Monetary Fund (IMF) figures showed that Qatar's real GDP, which has recorded one of the world's highest growth rates over the past decade, leaped by nearly 17 percent in 2010 and is forecast to pick up by about 19 percent in 2011, according to Global Investment House. Qatar's successful 2022 football World Cup bid is also expected to accelerate large-scale infrastructure projects such as Qatar's metro system and the Qatar-Bahrain causeway.
On the negative side, Bahrain bourse posted the steepest decline amongst its GCC peers, down by 20.15 percent for the year. The kingdom's economy is estimated to have lost up to $2 billion due to political unrest that hit Bahrain in the first quarter of 2011. All sectoral indices ended the year 2011 on a negative note, with only a handful of stocks ending the year with gains. In Kuwait, Global General Index ended with a 19.78 percent year-on-year decline, with all sectoral indices ending the year on a negative note. Global Investment Sector Index posted the steepest decline, shedding 30.39 percent of its value in 2011.
The services sector index followed with a 29.51 percent decline on the back of the notable retreat of several services stocks, including heavyweight Zain which lost around 31.8 percent of its share value. GCC markets had a mixed performance in the last trading month of the year 2011. The month of December 2011 was full of economic and financial developments that had their clear impact on the performance of specific markets. The Saudi market managed to add 5.13 percent in monthly gains, with Tadawul All Share index ending the month at 6,417.73 points. Saudi Arabia is pressing ahead with a long-awaited plan to open up its stock market to foreigners and is expected to formalise its rules by January 15. The country has been considering a wider opening of its market for several years and recently news emerged that it planned to offer a limited direct foreign ownership. Foreign investors currently are allowed to invest in Saudi Arabian companies only by share swap transactions via international investment banks, who deal with local partners. In other news, shares of United Electronics Company (Extra) was listed in the Saudi market in December. Extra's IPO was more than two times covered as overall subscription reached 851.1 million Saudi riyals ($227 million) at the close of the IPO. The 396 million offering, which was open for subscription to Saudi nationals and consisted of 7.2 million shares, representing 30 percent of the company's share capital, closed on December 11.
Subscriptions by nearly 261,000 individual investors reached 411.3 million riyals while the subscriptions of eligible institutions and funds totaled 439.8 million. Extra's shares price ended at 77.25 riyals, adding 40.45 percent to its value compared to its IPO price of 55 riyals. The Omani market also had a stellar performance, up by 5.07 percent for the month, with MSM 30 index ending at 5,695.12 points. In a recent report, IMF projected a 10 percent increase in the Omani government expenditure and an overall real GDP growth of 5 percent in 2012, while inflation is expected to remain moderate at an annual rate of about 3.5 percent. The Qatari market was also a notable gainer, up by 2.17 percent for the month, with QE index ending at 8,779.03 points. Qatar Exchange (QE) rode on the optimism of anticipated individual and institutional investor support to debt market securities like the Treasury Bills launched on Thursday, December 29. QE plans trading of bonds or fixed-income securities in 2012 as part of expanding its product portfolio. This move is considered a significant development for Qatar, signalling that the government's liquidity-boosting initiatives are finally being implemented.
Meanwhile, Qatar Financial Markets Authority (QFMA) said it has officially adopted the new listing and IPO rules in the secondary market after an in-depth consultation with the concerned parties. The new rules aim to regulate the working relationship between various parties concerned with the listing process to cope with developments in Qatar's capital markets, and to encourage newly established small- and medium-sized enterprises (SMEs) to list on QE. In the meantime, Kuwait Stock Exchange (KSE) had a mixed performance during the month of December 2011, with market capitilisation weighted, Global General Index retreating by 1.04 percent for the month, due to the negative performance of heavyweight stocks. In the meantime, the market's price index ended almost unchanged, inching marginally higher by 0.04 percent.
The stock market saw some ups and downs during the month, but ended flat, as political events took centrestage, pushing trading on the stock exchange to the sidelines. Investors adopted a wait and see approach following the appointment of a new government and the dissolving of the parliament, as they waited for the new elections in February 2012. UAE markets had a negative performance as well, with Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) posting monthly loss of 1.85 percent and 1.74 percent respectively. Some positive news pushed both markets to inch higher during the last week of December, however those gains were not enough to budge them out of negative territory for the month of December. News that the government of Abu Dhabi has bailed out the property developer Aldar, acquiring some of its assets, helped push real estate stock prices higher during the last trading week of the month and lowered their monthly loss.
Aldar's share price declined by 6.12 percent, while Sorouh Real Estate ended 5.56 percent lower. In the meantime, banking stocks had a stellar performance in both markets. In ADX, share price of National Bank of Fujairah and Bank of Sharjah appreciated by 21.66 percent and 17.37 percent respectively. Meanwhile, in DFM, share price of Mashreqbank soared by 35.88 percent by the end of December 2011. Aggregate volume and value of shares traded on the GCC bourse increased by 62.1 percent and 47.3 percent respectively during the month of December 2011. Market capitalisation of the GCC markets combined stood at $697.4 billion, up by $17.85bn (+2.63 percent) during the month. In the meantime, the breadth of GCC stock markets tilted towards advancers in December 2011, as 291 stocks registered monthly gain, compared to 205 decliners, out of 549 traded stocks.