Unified Arab stock exchange: key avenue for common market
Regional, Economics, 12/20/2002

A study recently conducted, underlined the need for the repatriation of the Arab investments and benefiting from them in order to serve the interests of the Arab states' citizens, encouraging Arab investment awareness through new mechanisms depending on investment in securities and linking Arab stock exchanges as an initial step towards satisfying the Arab sedition for setting up a unified Arab stock exchange

The study, which was conducted by Ahmed Saad, an expert at the Capital Market Authority (CMA) reveals that there are many components for encouraging Arab investment in Africa through assisting African countries in establishing and developing their stock exchanges, based on the strategic significance of the African markets to the Arab economies.

Saad called for focussing on investment in securities, as the main function of this market is to invest the community savings in securities.

He said investment in this way means that savings will transfer into capital of companies and associations practising various economic activities.

The securities market in this way seeks to transfer funds from units enjoying financial surplus to others facing financial shortages, a matter which helps to find investment opportunities for community savings on the one side and increasing capital productivity on the other, he said, adding that the development of investment in the stock market depends on providing certain instruments, legislations and the bodies supervising the market.

On the status of the Arab money markets, Saad said that until 1989, the Arab world had only six stock exchanges, namely, in Egypt, Tunisia, Morocco, Kuwait, Lebanon, and Jordan.

Elaborating, he said that Arab stock exchanges during the past few years witnessed fundamental reforms focusing on encouraging an economic, social and psychological environment suitable for the success of these stock exchanges, protecting dealers and deepening confidence through more attractive financial instruments.

"In spite of the development and reforms witnessed by stock exchanges, yet they are still in need for more development," he said.

Arab stock exchanges are also characterized by the low level of liquidity, the low number of transactions, heavy fluctuation of prices and the high losses incurred by dealers.

In his study, Saad shed light on the significance given by economic blocs to capital markets as an initial step towards achieving integration. For this reason, Arab states need to unify capital markets and unify stock exchange.

Arab states have taken steps towards the establishment of a unified stock exchange and the initial step in this direction was the establishment of a union for Arab stock exchanges within the framework of the Arab League.

This union aims at encouraging the establishment of new stock exchanges and the exchange of information on the activity of stock exchanges

Therefore, the idea of the establishment of a unified Arab stock exchange is a hope which the Arab states must translate into reality as it will achieve many benefits, mainly encouraging Arab states' citizens to invest in the shares of Arab companies and finding new channels of dealing.

The benefits of this project also include development of investment awareness and developing the role played by securities' brokers and settlement of the Arab Investments.

Shad offered a visualization for the development by African countries of their stock exchanges through the exchange of expertise and skills between the union of African stock exchanges and the union of Arab stock exchanges, developing cooperation between Arab and African markets.

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