Panic Seen in Emerging Markets; GCC Stable


Markaz Volatility Index (MVX) for GCC and International Markets - Markaz Volatility Index (MVX) points to higher volatility levels for emerging market and international market compared to GCC during the month of August 2007. Kuwait Financial Center (Markaz) has recently launched a new innovative index to measure stock market volatility in the emerging market and GCC region. Volatility is a risk measure used to gauge the degree of fear that prevails in stock markets at any point in time. The index is code named as MVX and has a base date of 1st January 2004. The index is constructed using a proprietary model that uses a combination of various statistical tools. GCC Volatility index (MVX-GCC) at 724 is just 40% of the emerging market volatility level and 60% that of S&P 500. This indicates that both emerging markets and US market is more volatile than GCC at the moment. The volatility index for S&P 500 as calculated by Markaz scaled new peak in August 2007 and is the highest since Jan, 2004. The current level is 40% higher than the average level. Emerging market volatility level increased by 24% during August 2007 and is very close to its historic high achieved during July-06. On the other hand, volatility level for GCC at 724 represents its historic low, a far cry from the level of 3,574 reached in July 2006! The GCC volatility index decreased by 25% during the month of August 2007. Within GCC, Saudi Arabia continues to be the most volatile of GCC markets. Even though the volatility index for Saudi Arabia declined by 5% during August 2007, it continues to be the most volatile market for the 17th consecutive month. MVX of Saudi Arabia is trading at a discount of 19% to its long-term average. Even though Saudi Arabia is the most volatility, its current level (2038) is 66% lower than the historic high (6,078) reached during August 2006. Saudi Arabia is followed by Dubai and Abu Dhabi in terms of volatility levels. Kuwait is the least volatile market among all markets. The current volatility index level at 538 is quite close to historic low of 433 reached during Feb-05. ### About Markaz Kuwait Financial Centre 'Markaz', with total assets under management of over KD1.20 billion as of December 31, 2006, 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.