Speaking at the opening of the 5th GCC Stock Market Summit, experts bucked suggestions to help regulate share prices and urged for the "transparency" of transactions by publicly traded companies and the availability of "enough" market information from regulatory bodies.
"By enough I mean reliable pieces of information that are in sync with the real values…" said Armen Papazian, senior vice-president of innovation and development at the Dubai International Financial Exchange (DIFX).
Meanwhile, the head of research and investment advisory at Al Rajhi Bank in Saudi Arabia, Saleh Alsuhaibani, said the merging and buying out sprees by regional companies have made "imprints" on the local bourses.
He said the GCC companies’ worldwide mergers and acquisitions, including transactions routed through third countries, have reached Dh216.65 billion ($ 59 billion) this year as compared to last year’s Dh96.6 billion ($ 26.31 billion).
He also said these have highlighted the global reach and expertise of regional companies, provided "greater depth" to the local markets, consolidated some telecoms firms and banks, and developed the local bond market.
"The region can be a major capital provider to the world, as it has been investing in foreign markets since the last oil boom," he said in a released presentation. "It makes sense for the member states to develop their own local market and attract foreign companies to list."
The UAE led in the share of acquiring companies since 2003 at 50.5 per cent followed by Saudi Arabia at 23.5 per cent, Kuwait at 10.2 per cent, Qatar at 6.5 per cent Bahrain at 5.8 per cent and Oman at 0.2 per cent.
Stressing that he was at the event on his "own personal capacity", Papazian said governments and regulators must approve a single uniform information on the economies to help buyers gauge planned investments in the stock market.
"Governments and regulators must patiently support the maturation process of the markets in the region," he said, noting that different economic figures released by a number of agencies are not very helpful for investors.
What the public needs, he stressed, is having access to education and information programmes such as investment manuals written in simple language in both English and Arabic. He said these are good tools for gauging market risks and chances, as "uncertainty is part of life".
Publicly listed companies could do better as well by informing the public of the real value of their new investments or where and how newly generated funds be invested, said to Akram Yosri, managing partner at 3I Capital Group, a global investment firm.
He said regulators should "get out of the way" and let the market decide for itself. He stressed that the role of regulators is to protect investors by upholding transparency among listed companies.
Alsuhaibani said the industrial sector was mostly targeted for mergers and acquisitions, getting a 25-per cent share as compared to the banks and financial firms with 20 per cent and 15 per cent for "other" sectors. The rest are distributed among the telecoms, logistics, oil and gas, airlines and aerospace, hotels, consumer and retailing and services.
He cited the recent merger between Emirates Bank International and the National Bank of Dubai, saying that similar deals are expected in the "near future", and Dubai’s state-owned DP World, which last year seized control of Britain’s most famous maritime company, P&O, through a bid of Dh24.6 billion (3.3 billion pounds).
He also mentioned the acquisition of the global plastic resins supplier, GE Plastics, by Saudi Basic Industries Corporation for Dh42.6 billion ($ 11.6 billion) in May.
"The region’s surplus renders it to be the supplier of capital to the world at large," he said. "This trend has been facilitated by the rise of sukuk (Islamic bonds) as a vehicle to this end."
He added that the GCC, which is awash with cash from high oil and gas receipts and has young and fast growing population, is looking out for firms that would create jobs and provide expertise to sustain economic growth.
