GCC Volatility edges upwards-Markaz Reports - Emerging markets also exhibit a similar trend.


The volatility levels across all the markets in GCC and the Emerging markets witnessed a rise in October as per the latest report released by Kuwait Financial Center (“Markaz”). Interestingly, volatility levels in US witnessed a marginal decline. The monthly volatility update report from Markaz indicates that Emerging markets volatility after taking a break in the month of September, spiked up again in October. Volatility in the GCC region which was lying low has witnessed a substantial increase in the month of October. The GCC level volatility has witnessed a rise of 134% during October 07 thanks to markets such as Abu Dhabi, Dubai and Kuwait. Abu Dhabi volatility index as calculated by Markaz stood at 3149 at the end of October, which is 178% higher than the 1132 level at the end of Sept 07. The 120 day moving average volatility of Abu Dhabi markets was at 1866. On a year to date basis, volatility for Abu Dhabi has increased by 89%. Similarly, Dubai markets too witnessed an identical trend in volatility. During the month of October, volatility increased from 1698 to 3654, a jump of 115%. However, the YTD increase has not been as steep as in the case with Abu Dhabi markets. The markets such as Kuwait and Saudi Arabia too have witnessed a turn around in volatility levels. Kuwait market, which was witnessing a flat to declining trend in volatility level from the beginning of the current year, has witnessed the single largest spike in the month of October. During October, Kuwait volatility has increased by 110% (from 695 to 1463). However, the YTD change in MVX Kuwait continues to be negative at -36%. The trend of volatility in Saudi Arabia was similar to that in Kuwait. However, the rise in October was almost similar to that in the month of March. Apart from this, the volatility for Saudi Arabia is lower by 54% as compared to last year.(YTD) This is in stark comparison to all other markets in the GCC region, which have witnessed an increase in volatility on a YTD basis. On the emerging markets front, India has witnessed a 73% increase in volatility during the month of October. This increase is similar to what was witnessed in the February this year. The Indian equity market during February fell by almost 8% and in March 2007 the market posted only a flat return indicating substantial under performance following high volatility. The MVX, (code name for Markaz Volatility Index) launched by Kuwait Financial Center (Markaz) is a measure of stock market volatility in the emerging market and GCC region. The index has a base date of 1st January 2004. Kuwait Financial Center in the month of November has added two more indices to include the markets of India and China. “Markaz” has developed a proprietary model to construct and maintain the index. The model considers many statistical properties of the underlying GCC stock markets in order to calculate the volatility index. ### About Markaz Kuwait Financial Centre 'Markaz', with total assets under management of over KD 1.40 billion as of June 30, 2007, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd.