Ms Najat Al Soweidi, Chairman of the Arab Investment Company mentioned that according to latest AIC Research, share prices of most GCC-listed Islamic banks rose spectacularly over the last three months, particularly during the last six weeks. In this regard, Al Soweidi mentioned that AIC Total Return Index for GCC-listed Islamic banks (accessible on the Thomson Reuters service) shot from 455.8 points on the March 10, 2009 to 787.58 points on the May 10, ie a rise of about 73 percent over just the last sixty days. From a month-on-month perspective, which is over the thirty days from April 10 to May 10, the Index rose by about 33 percent.
AIC Chairman explained that all Islamic banks listed on the GCC exchanges, excluding two, recorded rises in share prices from of Feb 10 to May 10. Among the top advancers during that period were the Gulf Finance House shares which rose by 81 percent, the Al Jazira Bank shares by 73 percent, the Ithmaar Bank shares by 68 percent, the shares of Dubai Islamic Bank by 50 percent, and Sharjah Islamic Bank shares by 43 percent, while shares of Kuwait International Bank and Al-Rajhi Bank rose by 41 percent and 29 percent respectively. Worth noting is that the rise in share price of the remaining advancers among the GCC-listed Islamic banks averaged 10 percent.
Al Soweidi commented that these upward movements clearly reflect the start of stability and recovery in the GCC markets in the wake of the global subprime crisis, whose reverberations prompted GCC governmental and monetary authorities to launch remedial measures and adopt staunch monetary policies to reactivate their markets. Al Soweidi also noted that the rise in share prices of most GCC-listed Islamic banks surpassed the average rise in these markets, and attributed this to the fact that activities of Sharia Compliant financial institutions are based on exchange of actual assets, not on paper transactions, which makes them the first beneficiaries of improvement in market conditions.
Al Soweidi added “on these premises, AIC has established Al-Khaleejee Fund of GCC-listed Islamic banks in mid-February this year, but postponed its launch until recently to secure the highest possible profit for potential subscribers”.
On his part, Dr Farid Lian, AIC Senior Vice-President for Research and Business Development commented that the structuring and establishment of Al-Khaleejee Fund was preceded by extensive research, which spanned over a year and looked into the financial position of GCC-listed Islamic banks, leading to the development of an AIC proprietary index tracking the movements of these shares. Dr Lian added that the timing of Al-Khaleejee launch has been preceded by a thorough performance monitoring of the underlying shares, and reflects AIC relevant committees’ high expectation of solid profits for the Fund subscribers.