In the realm of Arab financial markets, the year 2023 witnessed remarkable developments. The annual report issued by the Union of Arab Securities Authorities highlighted several key points:
Stock Price Improvements
Traded stock prices in regional markets experienced significant growth, particularly during the last two months of the previous year. This surge was fueled by expectations that central banks would initiate interest rate reductions in 2024, responding to easing inflationary pressures worldwide.
Global and Regional Gains
Key indicators for both global and regional markets achieved gains exceeding 10% throughout 2023. This positive trend reflected growing confidence in decision-makers’ vision and their ability to implement policies that mitigate economic downturns.
Strong Performance
Arab financial markets, especially in Gulf countries, attracted additional capital through successful offerings in 2023. This influx stimulated trading activity and bolstered overall performance.
Challenging Start
Arab markets faced a shaky start due to challenging conditions in the initial five months. Notably, in February, the Arab Standard & Poor’s Composite Index declined by 4.1%. This index measures the performance of 11 markets, including Egypt, Saudi Arabia, the UAE, Qatar, Kuwait, Jordan, and Tunisia.
Global Impact
The downturn at the beginning of the year extended beyond Arab markets, affecting global counterparts. Concerns over the US Federal Reserve’s tight monetary policy, including interest rate hikes, contributed to market volatility.
Resilience Amidst Losses
Despite severe losses in stocks and financial bonds across the United States, Europe, and Asia, regional markets managed a slight increase of 0.9% in stock prices during the third week of the current month.
Year-End Positivity
Arab financial markets concluded the year on a positive note. Notably, November and December recorded impressive performance gains of 5% and 7%, respectively. These improvements were driven by expectations that interest rates had peaked, coinciding with a slowdown in US inflation rates.
Market Capitalization
In December 2023, the combined market capitalization of Arab stock markets reached $4.5trn, marking a 12.2% increase compared to its value at the end of December 2022. The surge was primarily fueled by the “Tadawul” market in Saudi Arabia, which saw a 14% rise to reach $3.002trn in 2023 (up from $2.6trn the previous year).
Egyptian Exchange
The Egyptian Exchange witnessed substantial growth, with traded stocks recording a remarkable 95.8% rise, reaching $110.7 billion. This accounted for approximately 17% of the total trading value in the region. The surge was influenced by increased trading value in the Egyptian market following the introduction of treasury bill trading.
MSCI Emerging Markets Index
The Morgan Stanley MSCI Emerging Markets Index highlighted the Egyptian stock exchange’s impressive performance, showing a 41.8% improvement during the past year (compared to a 22.5% decline in the previous year). The index covers large and medium-sized sectors, representing about 85% of each country’s stock market.
Market Performance in Morocco and Lebanon
In 2023, Morocco witnessed a significant improvement, with its index rising by 22.8% compared to a negative performance of 31.6% in the previous year. Meanwhile, Lebanon’s index closed the year with an impressive increase of 47.4%, following an even higher surge of 85.5% in 2022.
Sector Breakdown
The report clarified that the energy sector had the largest share of market capitalization among other economic sectors in the region, accounting for 50.9% of the total market capitalization. Following it was the financial sector at 16.8%, while the consumer sector came third at 8.7%, followed by the basic materials sector with a share of 6.1% of the total market value.
