Emerging Equity Markets In Middle Eastern Countries

Within a broad framework for analyzing portfolio capital flows to developing countries, the paper undertakes a comparative analysis of equity markets in six Middle Eastern countries. The analysis, based primarily on a range of quantitative indicators, identifies the principal characteristics of these markets, including relative to international comparators, and examines associated structural features. This, along with an analysis of the informational efficiency of selected markets in the region, provides a basis for the subsequent review of policies for enhancing the role of equity markets in the macroeconomy of Middle Eastern countries.

Within a broad framework for analyzing portfolio capital flows to developing countries, the paper undertakes a comparative analysis of equity markets in six Middle Eastern countries. The analysis, based primarily on a range of quantitative indicators, identifies the principal characteristics of these markets, including relative to international comparators, and examines associated structural features. This, along with an analysis of the informational efficiency of selected markets in the region, provides a basis for the subsequent review of policies for enhancing the role of equity markets in the macroeconomy of Middle Eastern countries.

The book aims to unravel the potentials of Middle East financial markets, which are spread over a large and wealthy part of the world. These markets are gradually being opened for international investors seeking diversification and rewarding risk adjusted returns. However, opening up to international investors is a necessary but not a sufficient condition to attract institutional money needed to provide depth and professionalism to these markets. Without a cultural shift towards more transparency, better regulations and governance, and the availability of custody, clearance and equity research, up to international best practice, not much institutional money will be forthcoming to the region. Funding sources in the Middle East and North Africa Region are still predominantly channeled through the banking system, with equity and fixed income markets playing a marginal role. While the world's financial markets show on average a balanced structure of bank assets, stock market capitalization and debt securities, the capital mix in the region is heavily skewed towards bank assets with a share of 58.8%, equities around 34% and debt securities (bonds and Sukuk) 7.2%. Stock markets of the UAE and Qatar have recently been upgraded to emerging market status, which together with Egypt are the only three Arab countries that have selected listed companies featuring in the Morgan Stanley Capital Index for Emerging Markets (MSCI EM). Saudi Arabia has opened its stock market to direct investment by foreign financial institutions in the second half of 2015. The opening of the Saudi stock market is a major positive development for the region's capital markets. The path ahead for MENA finance has become now clearer. The relative weight of commercial banks in the financial system will diminish gradually, and a wider range of financial services will be provided by deeper and increasingly more sophisticated debt and equity capital markets, in line with worldwide trends. Sharia compliant products, such as Sukuk, are expected to continue to grow at double-digit rate to meet the strong demand generated regionally and internationally.

First Published in 1997. Economic adjustment programs that combine macroeconomic stability and structural reforms are being implemented in several Arab countries. Policy-makers also are devoting more attention to improving the operation of domestic capital markets. To invest in this region now would be a far-sighted move by entering at a stage when the process is still under way. This book is one of very few readily available sources of reference on the region's stock and bond markets, presented in a concise and accessible form. It provides investors, policy-makers, analysts, bankers and other market participants with comprehensive information covering the top 10 Arab stock markets of Saudi Arabia, Egypt, Jordan, Kuwait, UAE, Bahrain, Oman, Lebanon, Morocco and Tunisia. For each market, a historical background is given together with structure, listing and trading procedures, performance trends, financial indicators, sectoral analysis and underlying strengths and weaknesses.

Emerging market stock issuance relative to GDP rose in the late twentieth century to levels that roughly matched that of advanced, industrial markets. Nonetheless, the connection between owning shares of emerging market stock and the ability to influence the management of these firms remains fundamentally different from the analogous institutional connection that has evolved in industrial markets. The reasons for the differences in emerging markets are both historical and political in nature. That is, local equity markets have had the objective of providing for some degree of local ownership and control of large economic entities since the late nineteenth century. However, local markets have operated under different global political structures since that time, ranging from imperialism, to world wars, to sovereign developmental states, to neo-liberal states. Shares issued under these different structures have been reconfigured over time, resulting in a lack of convergence along either the Anglo-American or Continental models of corporate governance. The author uses a political science paradigm to explain the growth of emerging equity markets. She departs from conventional economic explanations and examines politics at the micro-level of large issues of emerging market stock. The second half of the book presents case studies dealing with emerging market countries in Latin America, Asia, Russia and Eastern Europe, Africa and the Middle East. The case studies connect the regional, state, and firm levels to detail the multiple ownership and control arrangements, and to dispel the notion that mere quantitative growth of these markets will lead to a convergence in financial institutional structures along the lines of the industrial core of the world economy.

Over the next decade, the economies of the Middle East will continue to be characterized by rapid growth, political turmoil, and increasing competitive intensity. International investors have the choice either to ignore the region all together and bypass business opportunities with great potential or to make a careful assessment of which countries to enter and how to enter them successfully. This book is the first of its kind to include the information, insights, and frameworks that are required to develop entry and growth strategies for the Middle East in the new turbulent environment following the global economic crisis and the Arab Spring. The first part of this book provides an in-depth analysis of the major developments that determine the business environment of different countries in the region, including a discussion of major social and economic developments, the impact of the rise in multinational companies from the Middle East, and the role played by institutions and political risk. The second part deals with each of the major decisions that a company planning to grow in the region needs to make: Which countries to enter? What is the right entry mode and ownership structure? How to choose between a greenfield operation and an acquisition? This book concludes with valuable and practical advice on the process of setting up operations in the Middle East.

In Korea, Thailand, Mexico, Chile and a host of other nations, stock markets previously shunned as illiquid, or simply too exotic, are evolving at a terrific rate, and drawing in ever more participants. Consider these facts:. The emerging markets' share of world market capitalization will grow from approximately 7 percent to 15-20 percent - a pace more than twice that of the industrialized nations.

"This book provides an analysis of the structural strengths and weaknesses of the Gulf stock markets and the appropriateness of policies implemented. It examines the effect of the 2006 correction on financial stability and economic growth and explains the differences in performance of some regional markets. This research integrates for the first time under a homogenous methodology the systematic analysis of all stock markets in the Gulf, identifies common trends and causes for differential behaviour and constitutes a key contribution toward the understanding of the functioning of the Gulf stock exchanges by domestic and foreign investors."--BOOK JACKET.