The Global Financial Crisis (GFC) has impacted world economies including the GCC. However the biggest issue has been the loss of liquidity in stock markets (as measured by value traded). Stock market investing and real estate are two essential pillars that provided occupational engagement to many GCC nationals. The collapse of both of these asset classes means significant contraction in many respects. This article dwells specifically on the issue of stock market liquidity, reviewing measures that can bring back liquidity at least to some extent if not all.
From a peak value, traded at over $1.6 trillion in 2006, liquidity experienced annual declines of 40 per cent in 2007, 2009 and 2010 each and reached a low of $296 billion in 2010 only to recover slightly to $354 billion in 2011, the first annual increase since 2006. The 2011 value traded is just one-fifth of the all-time peak experienced in 2006. Such a drastic fall led to many brokerage houses closing shop. So far, during the first half of 2012, the value traded has already exceeded that of the full year numbers for 2011 which is somewhat reassuring.
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