Institutions warm to Gulf exchanges

Pension, insurance, and mutual funds are usually thought of as leading drivers of stock market development – and of professionalisation. During the 1990s, the economic prospects of countries such as Poland and Chile were transformed by the heightened role given to institutional investors.

Gulf exchanges, in contrast, are dominated by retail traders who tend to be short term and often driven by events – perhaps the publication of a company’s results or an impending initial public offering.

In April, retail investors accounted for 91 per cent of trading by value in Saudi Arabia, 80 per cent in Dubai and 71 per cent in Kuwait. Big institutions were noticeable by their absence. This is, however, slowly changing, says an NCB Capital report.