GCC Market Capitalization crossed $1 trillion threshold to constitute 20% of the market capitalization of all emerging markets

The conference was held in Dubai from 12 to 13 February 2006, under the patronage of His Highness Sheikh Hamdan Bin Rashid Al-Maktoum, the Deputy Ruler of Dubai and Minister of Finance & Industry - UAE.

Mr. Alhajeri explained that the Stock Market capitalization of the GCC countries relative to GDP has increased by 120% in 2004 and is converging to major world markets ratio. "The Middle East markets now account for 20% of the market capitalization, and almost a third of daily trading in emerging markets," he added.

Furthermore, the number of listed companies on regional bourses has increased by 54% in just 5 years to reach 559 companies in September 2005. Evidently the liquidity in the markets has improved as shown by a growing turnover ratio of 106% in 2004, and the average P/E of the GCC stock market has reached a high 42 times in 2005.

The attractiveness of the GCC markets for global investors is high due to the negative correlation between the international markets and oil prices that provides a natural hedge for global investors when investing in the GCC markets.

"The efforts to reform the economy are progressing slowly but steadily in parallel with the government privatization programs, the emerging concept of unified gulf market, and the reforms of the capital markets," he said.

"The GCC governments have improved their regulations and laws of taxation and investments, to facilitate the penetration of foreign companies to the region. This presents a perfect gateway for channeling the region's abundant liquidity and enhances the efficiency of projects management; and this will provide better chances for cross-border investments and cooperation between private sector companies and foreign companies to reduce their financial liabilities, and enable them to expand globally," he clarified.

Alhajeri referred to the major factors that would bring confidence and comfort to foreign investors to invest in the region.
"The sound corporate, political and economic governance will facilitate capital flow only into countries and projects where the rules and regulations are clear.

"The GCC markets achieved healthy GDP growth, backed by a growth in crude oil revenues and growth in non-oil sectors of the economy, while crude oil prices are expected to remain firm" he added. "The contribution of oil and gas sector has reached a high 44% of GDP, due to the current inability of the Gulf region's to meet the demand for oil; existing capacities will require major expansion, massive infrastructure development with the help of well capitalized private sector companies," he said.

Alhajeri talked about the current investments of 297 billion dollars in new energy-related projects that require massive capital investments and specialized financial tools.

Mr. Alhajeri ended with an indication that the GCC Oil and Gas industry has a very bright future and is meant to grow from its low current contribution of 18% to the total value of GCC capital markets that is estimated to be $1504 billion. As of September 2005, there were only 22 oil & gas sector companies listed out of 559 companies listed on the regional exchanges.