GCC markets tumbled on global cues in August. S&P GCC lost 5.12 percent as Saudi tumbled 6.46 percent for the month. Kuwait's weighted index followed with a loss of 3.4 percent. All markets were in the red; the least decline was a 0.67 percent loss on the Abu Dhabi Exchange which is the best performing GCC index for the year thus far, Kuwait Financial Centre (Markaz) said in a report. Liquidity was down again in August. GCC value traded declined 15 percent to $17.76 billion, while volume was down 6 percent to just $6.65 billion. Saudi Arabia and Kuwait saw value traded decline by 21 percent and 14 percent, respectively. GCC value traded in the YTD period is at $232 billion. Risk in the GCC (as measured by the Markaz Volatility Index - MVX) was up just 28 percent in August after expanding one percent in July. The highest jump was in MVX Qatar, which doubled, while MVX Kuwait was down 16 percent. Monthly returns were highly negative across the board. The worst performance came from MSCI Europe, tumbling 10.4 percent for the month. Shanghai and Frontier Markets saw the least losses, shedding 5 percent and 5.2 percent, respectively, during August. World markets tumbled under pressure from continued economic issues in the US in addition to the impact of the August 5 S&P downgrade of US credit. Mid-month saw Fitch affirm the US rating while awarding it a "Stable" outlook versus "Negative" calls from S&P and Moody's. Also during the month, Moody's downgraded Japan's government debt by one-notch to Aa3, with a "Stable" outlook, due to a build-up of debt since the 2009 recession. Signs of flagging US demand and progress in Libya brought crude oil prices down 2 percent in August with a YTD gain of 24 percent. Conversely, the uncertainty has been a boon for Gold; the precious metal saw its highest monthly gain in 21-months, up 13 percent in August to close at $1,826/oz. The broad World index tumbled by 7.3 percent in August bringing the YTD loss to 4 percent. Saudi inflation was up to 4.9 percent in July (the largest monthly jump since 2008), although a moderate increase from the 4.7 percent registered in the previous month. Inflation is being closely monitored given large-scale funding and social welfare programs enacted during the year. Meanwhile, Qatar central bank cut interest rates to 4.5 percent to further boost loans growth. Total lending was up 14 percent YoY in July boosted by the trade and real estate sectors.
