1/3/2011GCC stock markets expected to grow in 2011 due to oil prices hike - report
KUWAIT, The Arab Gulf Cooperation Council (GCC) states will see a more upward trend in their stock markets in 2011 due to the better than before hike in oil prices and world economic environment, a specialized economic report said here Monday.
The report, released by Kuwait Financial Center Company (Markaz), added that the previous development will happen though slow credit growth and private investments still affect economic growth in GCC states.
It also said that it is expected for demand from private sector to remain weak over the medium run until the investors' confidence is fully retrieved, and until banks' budgets recover their healthy status.
The same report added that one of the probable reasons behind the low level of liquidity lies in the preoccupation of retail investors with resolving their own problems at time when conventional sources of finance for stock markets represented by full banking credit came to a halt.
The full retreat of earnings in some periodical sectors like investment sector was so severe that they could not recover, even for big sectors like banks that did not stop from setting high level of allocations, a thing which took investors aback, it said.
The report held an optimistic and positive vision for the new year in Kuwait, United Arab Emirates, Qatar and Oman, while it held a neutral view on other countries, adding that there are key investment plans that will have its influencing role.
Further, it expected that Saudi Arabia will keep its economic level in 2011 as a result of average economic activity and the high-grade appraisal, though the inflation and the troubled real estate sector should be taken into account.
It also said that Kuwait's performance next year will be positive thanks to good economic indicators and the sound corporate earnings, expecting for the Kuwaiti economy to grow by 4.5 percent in 2011 against the backdrop of soaring commodity prices, a factor which will make the domestic budget account for nearly 21.5 percent of the gross domestic product (GDP).
The same report said that Kuwait devised a five-year development plan estimated at USD 107 billion with the aim of motivating several economic sectors, adding that, at the level of corporate earnings and following the boom story of 2010, economic profits of various sectors are expected to take a more stable trajectory and to grow by some 32 percent.
It also said that value of the traded shares went down by 55 percent in 2010, another deflation ensuing the decline of 2009, which amounted to 44 percent.
According to latest economic predictions made by the Institute of International Finance, it is likely for the real gross domestic product of GCC states, which grew by 4 percent in 2010, to grow by 4.6 percent in 2011, it pointed out.
It is expected for growth in Kuwait to grow by 4.4 percent in 2011 against 2 percent in 2010, while the budget ring-fenced for boosting economic growth in Kuwait is expected to account for 22 percent of GDP in 2011.
Regarding the current account budgets, they remained relatively unchanged in the region's big economies with the biggest one of them in Kuwait hitting 36 percent of GDP in 2010, and growing to reach 38 percent of GDP in 2011.
http://www.kuna.net.kw/NewsAgenciesPublicSite/ArticleDetails.aspx?id=2135279&Language=en
