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Both the stock markets have lost a combined $104bn of their capitalisation since the start of October 2008.
In the Real-Estate sector we have seen a run down on Emaar Properties that has faced the worst of the brunt with its market capitalisation declining by $20.5bn or 81.1 per cent YTD while declining by $8.1bn since the start of October 2008, according to a report from Global Investment House.
Though a correction is taking place in the UAE real estate market, the report states it believes that the fundamentals remain strong. Real estate is an important part of the UAE economy and the government is likely to support it in case of any major downturn.
At the same time all the subs-sectors are not likely to witness correction, for example in case of housing sector still there is a growing demand.
Even in the event of problems arising in the Dubai real estate sector, we believe that there is a room for growth in Abu Dhabi, Saudi and Kuwait real estate market which will support further growth for real estate players. Thus, we believe that many real-estate companies are also providing a good opportunity to investors at current valuations, states the report.
The general GCC stock markets scenario shows that the region have lost 47.5 per cent since the start of the year wiping off $538bn from the market capitalisation while losing $373b since the start of October 2008.
The regions largest markets witnessed the bulk of the decline as slowing world economic growth; falling crude oil prices and the prevailing financial crisis have cast a bearish spell. Saudi Arabia, the largest market in the region, lost $254bn of its capitalisation since the start of the year.
Though, the sub-prime mortgage crisis came to the fore in 2007, the real effect of the crisis was felt when aEURLehman Brothers filed for bankruptcy in September 2008 which was followed by bail-outs of other major financial firms.
The uncertainty and intensifying of the credit crunch made investors exit the equity markets leading to large falls world over. Credit crunch was accompanied by fears of world economic slowdown, which was confirmed by the IMF recently when it slashed the world economic growth forecast by 0.8 per cent to 2.2 per cent for 2009, sharp decline in crude oil prices since reaching an all-time high in July 2008 and panic selling by investors caught the GCC markets in the cycle which has lost $373bn since the start of October 2008.
-- williamfaria@khaleejtimes.com
To see more of the Khaleej Times, or to subscribe to the newspaper, go to http://www.khaleejtimes.com. Copyright (c) 2008, Khaleej Times, Dubai, United Arab Emirates Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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