"You will see in this region a common capital market and securities market after the Gulf common currency," Tom Healy, director general at the bourse, said in an interview in Abu Dhabi on Monday. The exchange would start "some years" after regional monetary union, he said, without being more specific.
The Gulf Cooperation Council (GCC) states, which also include Bahrain, Oman, Qatar and Kuwait, in 2001 agreed to form a European Union-style monetary union with a single currency to help boost regional trade.
Though Oman has said it can’t meet convergence criteria by the 2010 deadline, the other five member states have said they remain committed to their 2010 target. At stake for international investors is access to stocks in a region that pumps about a fifth of the world’s oil and where the MSCI GCC Countries Index jumped 47 per cent last year on oil-fuelled economic growth. At $ 471 billion, Saudi Arabia’s stock market capitalisation is twice that of Greece’s bourse, yet only Gulf citizens and expatriates living in the kingdom may trade shares freely.
Healy headed the Irish Stock Exchange for 20 years before joining the Abu Dhabi bourse in September.
"While I don’t think the local bourses will disappear, I do see a possibility for a Euronext-style merger," Fahd Iqbal, Gulf equities analyst for EFG-Hermes Holding SAE, said in a phone interview from Dubai yesterday. "Fund managers still look at this region country by country, but in a couple of years they’ll start looking at it by industry sector as they do in Europe." Euronext NV is a pan-European exchange consisting of the Amsterdam, Brussels, Lisbon and Paris stock exchanges and the Liffe derivatives exchange. It was taken over by NYSE Group Inc. last year to form NYSE Euronext.
Investors from Latin America to Japan are seeking to buy Gulf stocks to tap the region’s economic growth and its relative isolation from global markets, Guillaume Hannebelle, Citigroup Inc.’s head of Middle East equities distribution, said last year. Before 2005 international interest in the stocks was "virtually zero" because few were open to foreign buyers and information disclosure was limited, he said.
Oman’s benchmark MSM 30 index has risen 15 per cent this year, making it the best performer of 90 gauges tracked by Bloomberg. Kuwait’s benchmark has risen 12 per cent and Abu Dhabi’s 4.8 per cent.
