There were notable developments in the Arab financial markets in 2023. The annual report of the Union of Arab Securities Authorities highlighted several key points:
Stock price improvements
The traded share prices on regional markets recorded significant growth, particularly in the last two months of the previous year. This rise was fueled by expectations that central banks would cut interest rates in 2024 to respond to easing global inflation pressures.
Global and regional profits
Key indicators for global and regional markets recorded increases of over 10% in 2023. This positive trend reflected growing confidence in policymakers' vision and their ability to implement measures to mitigate economic downturns.
Great job
Arab financial markets, particularly in the Gulf States, attracted additional capital in 2023 through successful offerings. This inflow stimulated trading activity and strengthened overall performance.
Challenging start
Arab markets got off to a shaky start due to difficult conditions in the first five months. Notably, the Arab Standard & Poor's Composite Index fell 4.1% in February. This index measures the performance of 11 markets including Egypt, Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Jordan and Tunisia.
Gglobal impact
The downturn at the start of the year extended beyond Arab markets and also impacted global markets. Concerns about the Federal Reserve's tight monetary policy, including interest rate hikes, contributed to market volatility.
Resilience to losses
Despite heavy losses in stocks and financial bonds in the United States, Europe and Asia, regional markets recorded a slight increase in stock prices of 0.9% in the third week of the current month.
Positive at the end of the year
The Arab financial markets ended the year on a positive note. Notably, November and December saw impressive performance increases of 5% and 7%, respectively. These improvements were driven by expectations that interest rates had peaked, coinciding with a slowdown in U.S. inflation rates.
Market capitalization
In December 2023, the combined market capitalization of Arab stock markets reached $4.5 trillion, an increase of 12.2% compared to its value at the end of December 2022. The increase was primarily fueled by the “Tadawul” market in Saudi Arabia, which witnessed a 14% increase to $3.002 trillion in 2023 (versus $2.6 trillion the previous year).
Egyptian exchange
The Egyptian Stock Exchange recorded significant growth, with shares traded registering a notable increase of 95.8% to $110.7 billion. This represented about 17% of the total trade value in the region. The increase was influenced by the 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 highlights the impressive performance of the Egyptian stock market, recording a 41.8% improvement last year (compared to a 22.5% decline the previous year). The index covers large and medium-sized sectors and represents approximately 85% of each country's stock market.
Market development in Morocco and Lebanon
In 2023, Morocco recorded a significant improvement: the index increased by 22.8%, compared to a negative performance of 31.6% in the previous year. Meanwhile, the Lebanese index ended the year with an impressive rise of 47.4%, after recording an even higher rise of 85.5% in 2022.
Sector breakdown
The report clarified that the energy sector accounted for the largest share of market capitalization among other economic sectors in the region, accounting for 50.9% of the total market capitalization. This was followed by the financial sector with 16.8%, followed in third place by the consumer sector with 8.7%, followed by the basic materials sector with a share of 6.1% of the total market value.
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