Gulf’s stock markets need more reforms to get small investors back | Analysis – Gulf News
GCC stock markets have suffered from a lack of liquidity periodically despite many measures and incentives that have been put up by the authorities and listing companies. This confirms that other factors that have led to the decline in trading volumes, and these need to be addressed to maintain the vital role stock exchanges play as the creator of assets.
One key issue relates to governance, as Gulf stock exchanges still lack in adequate legislation to rollback legacy rules that have put off investors. The lack of governance has led to a rise in the number of retail investors who have refrained from dealing in stocks after losing most of their savings in past transactions from a lack of market transparency and poor governance.
Feeding off insider info
The problem lies in the dominance of speculators who feed on selective leaks put out by managements of listed companies and without being held accountable for it. This happened after the big stock market crash of the mid-2000s and repeated just over six years ago. Their repercussions continue even now.
Which is why the Gulf’s stock markets require a comprehensive review of existing legislation and leading to their implementation in case of violations to restore investor confidence. The average monthly growth in market value of Gulf stock exchanges was only 2.1 per cent in August, according to the GCC Statistical Centre, compared to a 13 per cent rise for Nasdaq earlier this year.
No comments:
Post a Comment