In the area of Arab financial markets, the year 2023 witnessed notable events. The annual report published by the Union of Arab Securities Authorities highlighted several key points:
Share price improvements
Share prices traded on regional markets experienced significant growth, particularly during the last two months of the previous year. This increase was driven by expectations that central banks would initiate interest rate reductions in 2024, in response to easing inflationary pressures around the world.
Global and regional profits
Key indicators for global and regional markets achieved gains of over 10% throughout 2023. This positive trend reflected growing confidence in the vision of decision-makers and their ability to implement policies that mitigate economic crises.
Strong performance
Arab financial markets, especially in the 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 difficult conditions in the first five months. In particular, in February, the Arab Standard & Poor's composite index decreased by 4.1%. This index measures the performance of 11 markets, including Egypt, Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Jordan and Tunisia.
GRAMglobal impact
The slowdown at the beginning of the year spread beyond Arab markets and affected their global counterparts. Concerns about the US Federal Reserve's tight monetary policy, including interest rate hikes, contributed to market volatility.
Resilience in the midst of loss
Despite the serious losses of stocks and financial bonds in 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.
End of the year positivity
Arab financial markets concluded the year on a positive note. Notably, November and December saw impressive yield gains of 5% and 7%, respectively. These improvements were driven by expectations that interest rates had peaked, coinciding with a slowdown in inflation rates in the United States.
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 driven mainly due to the “Tadawul” market in Saudi Arabia, which experienced an increase of 14% to reach $3.002 billion in 2023 (compared to $2.6 billion the previous year).
Egyptian exchange
The Egyptian Stock Exchange witnessed substantial growth, with shares traded recording a notable increase of 95.8%, reaching $110.7 billion. This represented approximately 17% of the total trade value in the region. The increase was influenced by the increase in trade 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 impressive performance of the Egyptian stock market, showing an improvement of 41.8% over the past year (compared to a drop of 22.5% the previous year). The index covers large and medium-sized sectors, which represent around 85% of each country's stock market.
Market performance in Morocco and Lebanon
In 2023, Morocco saw a significant improvement: its index increased by 22.8% compared to a negative performance of 31.6% the previous year. Meanwhile, Lebanon's index closed the year with an impressive 47.4% rise, following an even bigger 85.5% rise in 2022.
Sector breakdown
The report clarified that the energy sector had the largest market capitalization share among other economic sectors in the region, accounting for 50.9% of the total market capitalization. The financial sector followed with 16.8%, while the consumer sector came third with 8.7%, followed by the basic materials sector with a share of 6.1% of the total market value.
