GGC Stock Markets Liquidity (January – September 2019)

Total liquidity of the seven stock markets of the GCC in the first three quarters of this year increased by 4.3% compared to the first three quarters of 2018. Total liquidity scored about $230 billion until the end of last September. Rise in liquidity was not comprehensive but it was achieved due to increase in the liquidity of only three exchanges, the rise in two of them was high, while the other four exchanges achieved varied decline in their liquidity and two of them achieved slight decline.Boursa Kuwait achieved the highest liquidity growth by 103.5% until the end of September; its general index gained 11.8%, the second highest gain among the seven stock exchanges. The second stock market in high liquidity growth was Abu Dhabi Stock Exchange by 50.1% though its general index gains did not exceed 2.9% and came fifth in gains. Bahrain Stock Exchange was the third-highest in liquidity growth by 13.7% since the beginning of this year. This increase in liquidity was enough to push its stock index gains up to 13.4% to outperform its seven colleagues in terms of gains.

The biggest loser in liquidity level was Dubai    Stock    Exchange  which  fell by -19.4%, but, and contrary to the proportional relationship between liquidity and gains, its index achieved the third highest gains in the region by 9.9%. The second biggest loser in liquidity level was the  Muscat  Market  whose  liquidity lost -13% and thus it was the biggest stock market in the region in loss since the beginning of this year; its index lost about -7.1%.  Loss of both Qatar Stock Exchange and the Saudi Stock Exchange was less than 1% each. With these, the Qatar Stock Exchange gained only 0.7% for its index while the Saudi market gained 3.4%.While the Saudi market is still the dominant market in its share of the region’s liquidity despite the decline in its share of total liquidity from 78.9% for the first nine months of 2018 to 75% since the beginning of this year, Boursa Kuwait has achieved an increase in its share of total liquidity from 4.5% in the first three quarters of 2018 to 8.7%, becoming the second-highest stock exchange in liquidity in the region.

The liquidity index is the most important index as we have mentioned repeatedly. It is a proof or evidence of the rise of confidence in the performance of the stock market management and the integrity of the information of its listed companies. Maintaining the attractiveness of the stock market to liquidity is a vital factor. We believe that there is a need for an effort to support the confidence of the local investor in the “Boursa Kuwait” as selling still prevails over buying. There should also be an effort to adjust the deviation in the boursa liquidity as half of its companies still have less than 1% of it, and some are sold at half of their book value as we will try to address in subsequent paragraphs of our report.