Chief Executive of Casablanca Stock Exchange Karim Hajji speaking to a journalist on the sidelines of the annual assembly of the Union of Arab Stock Exchanges in Casablanca yesterday.

CASABLANCA: Struggling Arab bourses have the fundamentals to rebound faster than other emergent markets but must first gain investor trust with strong regulations, outgoing Union of Arab Bourses chief said. Fadi Khalaf said on the sidelines of the annual assembly of the union yesterday that to recover the bourses needed better regulations to tackle market turmoil and to increase transparency to bolster battered investor confidence.

The Union groups 15 stock markets, including heavyweights Saudi Arabia and Egypt as well as market debutants Libya and Syria. “Arab stock markets have the potential to recover faster than other emergent bourses because the region produces oil and there are several firms making strong profits—however their stock prices are falling,” Khalaf said.

“Stock prices in the region are low and are attractive to buy but there is a lack of trust and confidence from the investors. The key is the return of investor confidence,” he said. The global crisis, which has wiped out huge investor wealth around the world, has been more acute for stock investors in the Arab world, especially in the rich Gulf region. “Arab bourses lost around $600bn between the beginning of 2008 and now. The index of our stock markets had lost 5.15 percent more than world average,” Khalaf told the bourse chiefs.“The current crisis is a crisis of confidence and trust in the markets.”

He said nascent markets in the region still lacked good governance rules and transparency and were vulnerable to changes in the price of oil, which is the mainstay of most economies in the area.

“Yes, more control, exposure and transparency are needed in the region. Measures and mechanisms are needed to be set up to face crisis and regulate the markets,” Khalaf said.Regulators in key markets have stepped up their efforts to try to restore investor confidence.

The United Arab Emirates market regulator last month banned directors and senior company executives from trading in their firms’ shares 15 days prior to the end of the quarter in an effort to increase transparency and prevent insider trading. Also last month, the Saudi regulator launched a probe into 92 cases of market violations, including price manipulation and improper disclosure.