KUWAIT CITY, July 16: Capital markets in Gulf Arab states made an impressive 76 per cent rise in value to around one trillion dollars in the first half of 2005, on the back of high liquidity fed by a surge in oil income.

Market capitalization in the six-nation Gulf Cooperation Council (GCC) has surged to 927 billion dollars, up by 76 per cent from results at the end of 2004, said a new report by Kuwait’s leading Global Investment firm.

Total market value of the seven stock markets of the energy-rich GCC states had increased from 119 billion dollars in 2000 to 526.3 billion dollars at the end of last year, a gain of more than 340 per cent.

The GI report expected the GCC bourses to continue their upward trend for the remainder of the year because of record-high oil prices and better-than-expected corporate results released so far.

The GCC groups oil and gas-rich Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The UAE has the Abu Dhabi Securities Market and Dubai Financial Market while the other five GCC states have a bourse each.

The dramatic increase in market value for the seven bourses has prompted indices to hit new all-time highs.

The Saudi stock market accounted for more than half of the GCC market capitalization at the end of June at 517.4 billion dollars, 2.5 times its value a year ago and 69 per cent up on its 2004-end value of 306 billion dollars.

Saudi bourse accounted for 430.7 billion dollars or just under 80 per cent of turnover in all the GCC equity markets. It was followed by UAE markets with 58.6 billion dollars and Kuwait with 43.3 billion dollars.

Abu Dhabi and Dubai markets combined capitalization grew to 191.5 billion dollars on June 30, up by 220 per cent from 60 billion dollars a year ago, and an impressive 133 per cent since the start of the year.

Qatar’s market value grew from just 12 billion dollars a year ago to 40.4 billion dollars at the end of 2004 before doubling its capitalization in the first six months of this year to 83.9 billion dollars.

Kuwait Stock Exchange (KSE) value rose 75 per cent in one year to 106.4 billion dollars on June 30.

The relatively smaller stock markets in Bahrain and Oman increased by around 24 per cent each in the first half of this year to 16.6 billion dollars and 11.2 billion dollars, respectively.

Trading value in the seven markets during the first half of the year reached 547.3 billion dollars, just short of the 551.9 billion dollars for the whole of 2004, Global Investment figures showed.

Global Investment attributed the sharp rise in trading value to abundant liquidity spurred by a sharp growth in oil revenues by the six GCC countries.

The six are producing at almost full capacity of 17 million barrels per day (bpd) and their daily income is believed to be close to 900 million dollars.

Accordingly, the GCC states will net over 300 billion dollars in oil income in 2005.

Lack of other proper investment channels, particularly in the industrial sector, was cited by market reports as another reason why private Gulf investors concentrate on equity markets. —AFP