Share Trading Boom in Lebabnon, Saudi Arabian Stock Market

Submitted by Marco on 26 April, 2006 - 20:45

With the ASX All Ordinaries hitting all time highs today to 5272.1 and ASX reporting a huge increase in net profits due to the increased levels of share trading, it is important to step back a little and have a look at the bigger picture every now and again. I was surfing around the web when I stumbled upon a Lebanese news website called Dar Al-Hayat. It had an article titled "The Impact of Share Trading on the Household Spending Behaviors" by Fouad Sadek Mufti - a former Saudi ambassador. Lebanon is a world away from Australia and other Western cultures and it totally apparent in this Business opinion column. While IMF reported the best growth in three decades, in Australia we saw our markets boom as a result of the Resources sector, the share trading boom is also occuring in Lebanon.

Share Trading Boom!

Honestly, I can't make heads or tails of the article. Maybe it's because it was translated from Arabic to English literally - and don't we all know what happens when you do that. You get non-sensical English that doesn't make sense. In the first paragraph I can probably safely assume that the "Saudi Stock Exchange phenomenon" with their markets booming had led to a change in social attitudes to the markets and people talk about the market movements freely. In Australia that is certainly the case, with the baby boomers growing older, there is a boom in financial education, services as well as increased exposure in the media.

I wasn't too sure what the next paragraph meant:
"Then came another "phenomenon": that of stocks and investment funds diverting liquidity from trade to Stock Exchanges. Therefore, trade shrank, while the previously lavish consumption spending was rationalized." What is this "trade"? Maybe it has to do with the unique way the Arab world does business. They have their own unique way of business. For example Muslims can't pay or earn interest as it is against their law. I think this "funds" business has something to do with an approval for a new Saudi Stock exchange back in 17 June, 2003. According to the article, it seems like they had an interbank bourse before a full Saudi Arabian Stock Exchange was approved as a result of the approval of their Capital Market Law. "Until now, electronic trading of shares was controlled by the Saudi Arabian Monetary Agency (SAMA), the Gulf state's central bank." "A Saudi Securities and Exchange Commission will also be established to protest investors' interests and regulate the market." And about these Saudi Arabian markets hitting all time high - here's an article.

The point of this article was to have a look at the the share trading boom overseas... (as well as trying to understand the language and the business culture abroad.) I hope I didn't ramble on too much...