ABU DHABI, Jan 3: Strong income from higher oil prices did little in 2006 to help most stock markets in the Arab world, as they endured one of their worst years on record.

Having gained $667 billion in value in 2004, the 14 bourses collectively shed $426 billion in the year 2006, with Saudi Arabia alone losing $323 billion.

Some markets around the region did gain ground, but in the oil-rich Gulf -- mainly in Saudi Arabia, the United Arab Emirates (UAE) and Qatar -- the trend was downwards.

Those four bourses together suffered a setback of $436 billion, with the Saudi market losing half of its end-of-2005 capitalisation.

“The Saudi Arabian market bade farewell to its worst ever financial year in 2006. It was the biggest loss in the market’s history,” Bakheet Financial Advisors said.

In the Gulf region, Kuwait’s market capitalisation remained almost unchanged at $143 billion, but that was mainly due to the entry of new companies and capital increases by some listed firms.

The smaller bourses of Oman and Bahrain rose slightly.

Dealers blamed speculation, fraud and investors' ignorance for the negative performance, while the International Monetary Fund pointed its finger at a lack of other major investment channels in the Gulf plus excessive liquidity resulting from the surge in oil earnings.

According to preliminary estimates by the Organisation of Arab Petroleum Exporting Countries (OAPEC), the combined Arab oil income was projected to exceed $400 billion in 2006 for the first time after hitting a record $327.3 billion in current prices in 2005.

Ziad Dabbas, share dealing adviser at the government-controlled National Bank of Abu Dhabi, said 2006 was “considered by all standards as one of the most difficult years for some Arab stock markets, mainly the UAE, Saudi Arabia and Qatar”.

“This chaos in the regional stock markets was a result of widespread speculation, investment ignorance by many dealers, the low level of transparency in the markets, and manipulation by some investors who have access to classified information,” he said.

Figures from the Arab Monetary Fund showed the market capitalisation of the 14 formal Arab exchanges dived to around $863 billion from nearly $1.29 trillion at the end of 2005 -- a year that had seen the bourses put on staggering $667 billion.

The number of listed companies meanwhile declined, to 1,607 at the end of last year from 1,665 at the end of 2005.

The AMF's composite share index, which tracks all regional indices, sharply dropped to 246.58 points at the end of 2006 from 349.09 points a year earlier -- a decline of 29.4 per cent.—AFP