INTERNATIONAL. Middle East markets, with the exception of Qatar, ended the year with deep losses after grappling with the Arab Spring and shaken local confidence, concerns over the global recovery and the unresolved eurozone debt crisis.
The Arab spring revolts hit Gulf bourses early in the year but they managed to recover the losses as local governments dished out large handout to stave off unrest, including US$93 billion in social spending announced by Saudi Arabia in March.
The eurozone debt crisis and a fragile state of United States economy has kept foreign investors at bay, while local investors also cut risk in equities.
The losses ranged, from 3.06% in Saudi Arabia to 49.3% in Egypt.
For the last week of 2011, regional bourses inched up, mainly due to year-end window-dressing tactics and keenness on the part of investors to build up positions ahead of annual corporate earnings' statements, they added. But that did not reverse the overall trend.
'Arab markets recorded major losses across the board in 2011 due to the Arab Spring revolts, other geopolitical developments and exacerbating fears about an early world recovery,' Wajdi Makhamreh, chief executive of Amman-based Noor Investments, told dpa.
He expected the persisting eurozone debt ordeal, the escalating standoff between Iran and Western powers over Iranian nuclear aspirations, and Tehran's threats to close the Hormuz Straits - a key oil shipping lane - to put additional pressure on regional markets in the new year.
'Oil prices will remain a crucial factor for Middle East markets as they decide the financial standing of oil-producing countries and their ability to accumulate surplus petrodollars that seek investment outlets,' Makhamreh said.
UAE markets edged to a higher close on Thursday but are not far from their multi-year lows hit a few sessions earlier on lack of interest in local equities from institutional and foreign investors as volumes evaporated from the bourses.
Dubai's all-share index gained 1% on the week, closing at 1,353 points, while Abu Dhabi's benchmark rose 2.2%, closing the year at 2,402 points.
On Thursday, Dubai's index ticked up 0.5%, trimming 2011 losses to 17%. Abu Dhabi's benchmark advanced 1.5% to 2,402 points, curbing 2011 losses to 11.68%.
In recent months, these markets have been tracking global markets, though tighter on the downside, in the absence of local catalysts. Market participants expect them to continue taking direction from world equity moves next year.
Property stocks were the main drag on the index for the year, as little signs or recovery in the sector since the 2008 bubble-burst failed to entice investors.
"In the UAE, companies' growth is still not visible," Shakeel Sarwar, asset management head at investment bank SICO in Bahrain, told Reuters "This perhaps is one of the reasons why the market has also underperformed. The real estate sector will continue to struggle next year -- there are no signs of improvement."
While Dubai's property market showed some signs of stability, Abu Dhabi continued its downslide with fears that more may be coming.
Aldar Properties, the emirate's largest property firm by market value, rose 9.5% on the final day of trading after it received a US$4.57 billion lifeline from the Abu Dhabi government which bought its key assets and retired a loan.
This was the second bailout for the indebted developer in 2011 with Abu Dhabi pumping over US$10 billion into the company.
Saudi shares extended gains in the last week of 2011, deriving momentum mainly from the unveiling by the world's largest oil-exporting country this week of a 187-billion-dollar public budget for 2012, the state's largest budget in history.
The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange gained 1.4% on weekly basis, closing at 6,418.13 points.
But, on a yearly basis, the Saudi benchmark lost 3.06%. It eased 0.3% on Thursday, ahead of its last trading day of the year on Saturday.
Petrochemicals stocks pressured the market, as they tightly tracked oil price volatility, while subdued growth in banking stocks also weighed.
"We see two key trends for Saudi Arabia is 2012 - the global economy uncertainty and how that will affect us and volumes shifting from the region to the kingdom," said Asim Bukhtiar, head of research at Riyad Capital.
"Investors will look more at companies with a domestic focus that are not dependent on exports."
Saudi Arabia is pressing ahead with a long-awaited plan to open up the largest Arab bourse to foreigners and it hopes to formalise its rules by January 15, a source told Reuters.
'I believe the Saudi market has responded positively to the budget's projections,' Saudi analyst Yassin al-Jaffri said.
'I think Saudi stocks will advance further in the new year, buoyed by the fourth quarter results. We expect strong earnings for blue chips, mainly petrochemical firms,' he added.
Kuwaiti shares firmed this week on what analysts described as window-dressing moves that seek to raise prices of listed firms for balance sheet considerations.
Kuwait's KSE all-share index gained 0.3% this week, to close the year at 5,814 points.
The measure rose 0.5% on Thursday trimming its 2011 losses to 16.41%. The plunge was also driven by political turmoil, analysts said.
Faring the best among its peers, Qatar's index ended 0.4% lower Thursday at 8,779 points, up 1.1% in 2011, as the only regional bourse gaining in the year. On a weekly basis Qatar's index was almost unchanged.
"I don't think Qatar is expensive-- there is more upside potential considering its corporate earnings and economic growth rate," said Sarwar.
Qatar's economy is estimated to grow by 17.5 percent in 2011, according to a Reuters December poll.
Bahrain's measure slipped 0.1% Thursday to 1,143 points and was little changed on the week. The bourse lost 20.15% in 2011.
The index gained 0.3% on Thursday to 5,695 points. For the year, it closed down 15.7%.
Jordanian shares rebounded this week with the all-share index of the Amman Stock Exchange (ASE), gaining 0.9% to close the year at 1,995 points, a 16.72% decline for 2011.
Egypt's AGX 30 index gained 0.2% on the week, closing the year at 3,622 points.
On an annual basis, the Egyptian benchmark punged 49.3% in 2011, a loss of US$32.24 billion due to the uprising that toppled the regime of President Hosni Mubarak.
Analysts expected the upward correction to continue at the Egyptian stock exchange in the first week of 2012, but said further declines could not be ruled out, according to dpa.