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| Arabia |
| Region's bourses lose $140bn in five weeks |
| 2011-03-07 |
| [Arab News] Political unrest in the region has eroded $140 billion in market capitalization from stock markets in the Middle East and North Africa over the past five weeks. The market capitalization of 16 Arab bourses was valued at $862 billion on March 4, compared with $1.002 trillion on Jan. 25, a day prior to the political crisis in Egypt that triggered unrest across the Middle East, Rooters quoted a report from the Arab Monetary Fund on Sunday. Arab stock markets gained about 9 percent in 2010 with their market capitalization touching $983.8 billion, the report from the Abu Dhabi-based fund said. "The current situation offers uncomfortable echoes of the post-Lehman Brothers period when a bout of investor panic led to significant value destruction that bore little relation to economic fundamentals in a region that was soon to emerge from the crisis far more unscathed than its peers," said Jarmo T. Kotilaine, chief economist at the National Commercial Bank. Once again, he said, we are seeing investor behavior thon the lamly disregards the underlying strength of the regional economy due to an overreaction to uncertainty. From the perspective of the GCC bourses, this continues a frustrating pattern of relative under-performance as attractive fundamentals are countered by investor malaise, whether as a result of economic or socio-political anxieties. The risk, of course, is that the malaise lingers for an extended period, continuing in some ways a structural downtrend that began after the 2005-2006 bubble corrected. "The challenge for the region is to redouble efforts to address both the temporary and the structural causes of this underperformance," Kotilaine added. He said right now there is an acute need for effective communication of the attractive fundamentals and the solid economic prospects of the region, as well as of the various policy efforts underway to boost development. Most of them are ongoing and of relatively long standing, rather than merely reactions to the crisis. In structural terms, the crisis highlights the risks of retail investor-dominated bourses and a lack of investor education. These problems do not have immediate solutions but that only increases the urgency of intensifying the efforts currently underway to foster the maturation of these markets. The losses in just over a month are far more than what the markets gained in 2010, an AMF official said. Initial public offerings (IPOs) resumed a slow recovery in the Arab markets with 27 issues in 2010, raising $2.75 billion compared with 17 issues valued at $1.98 billion the previous year, the report said without giving details. Foreign investors have been net sellers in the Arab stock markets in the first-quarter this year as most shied away in the last few weeks due to the regional turmoil, the report added. |
| Posted by:Fred |
| #2 Duke Energy (DUK) is just under $18. Still a bargain. |
| Posted by: Besoeker 2011-03-07 08:46 |
| #1 Great post Fred. Everyone is gathering on one side of the boat. Calmer heads will take advantage now. Water and food will return as primary issues after this distraction is over. |
| Posted by: Dale 2011-03-07 08:40 |