This study will analyze the emerging Middle Eastern stock markets comprising of Dubai stock market, Abu Dhabi securities market, Cairo stock exchange, Amman stock exchange, and Kuwait stock exchange. It has been noted that Middle Eastern stock exchange markets have been growing both in size and participation of late. Some of the factors that have necessitated the integration are unique to the stock exchange markets. For example, Cairo’s stock exchange strengths are in constant improvement to adapt to a changing global economy. This is one of the principles by which it is steered towards global integration with other Middle Eastern markets. There have also been efforts facilitated by small Arab trading blocks such as the Gulf Cooperation council (Norman, 2007).
However, Arab economies now trading in the Middle Eastern Stock exchange have had a series of conflicts in the past such as the 1958 Lebanon crisis. Apart from this, the countries have been affiliated differently with partner nations such as the affiliation of Kuwait with America as a major non-NATO ally (Adnan, 2009). This could impact negatively on integration with other nations that might be hostile to America. The difference in economical activities might also pit one nation against the other and therefore lead to discord in market activities. For example, the dominance of United Arab Emirates as a core oil producing nation in the Middle East would make it have a different economic structure as compared to Egypt which is predominantly characterized with agriculture and tourism. It would then be interesting to note how these factors play into the realization of an overall integration of the Middle Eastern stock exchange market.
Background of Study
The net capital inflows in emerging economies have greatly contributed to the uneven distribution of economic potential in major countries (Click, 2005). This is partly what necessitates the integration of stock markets in the Middle East to integrate and remove this divide. However, most capital inflows to the Middle East, Africa and Europe have remained widely official (Gerlach, 2006). There are however some important exceptions of Egypt, Turkey and South Africa (Johansen, 2008). The net private inflows have also differed in the countries (in relation to GDP and exports) (Gerlach, 2006). Increased growth in these markets has been tremendous due to increased trade between the countries (Graciela, 2001). Some countries however still retained the restrictions on capital investments across borders. This has however not deterred some emerging economies from experiencing gross capital inflows leading to the realization of a vibrant stock market (Antell, 2007).
The economic potential of the major Middle Eastern economies is tremendous, with Kuwait having a GDP of $167.9 billion and a per capita income of $81,800. It is also termed by the World Bank as the fifth richest country (David, 2008). In addition, United Arab Emirates is a rapidly diversifying economy according to World Bank estimates (David, 2008). It has a GDP of $270 billion and ranked third in the Middle East and North African region in the same respect (David, 2008). Egypt has a GDP of about $452 billion in 2008 with a growth rate of 4.7% and Jordan rates $31 billion in GDP with a growth rate of 8.31%.
Objectives of the Research
To establish the relationship between the growth of the Middle Eastern stock markets and its market integration
- To explore the importance of the growth of the Middle Eastern stock markets and integration of these markets
- To find out the factors that lead to the liberalization and the level of the integration of the Middle Eastern stock market.
- To establish the relationship between oil production and the level of the integration of the stock markets in Middle East.
- To establish the effects of technology on the integration of the stock markets in the Middle East.
Importance of Research
Integration of stock market is an emerging trend especially necessitated by the development of technology across borders. This study analyses the factors that lead to integration and its advantages. Similar trends have been observed between American and European equities. This information is very useful to investors who may want to understand the complexities of Middle Eastern markets. It also becomes interesting to note the trends that make investors hold on to risky equities just so they could make a profit. The study seeks to demystify the speculative tendencies regarding equity market. It’s also a noteworthy fact that equity risk premium affects the portfolio analysis in different markets (Hassan, 2006).
Stock market integration is however a gradual process and basically depends on the situation in each of the countries that are taking part (Johnson, 1999). It would be of importance to highlight this process for future international amalgamations by determining the factors and characteristics of markets that would integrate. It’s however important to take note of how integrity and openness affects the performance of international markets. The steps taken by Middle Eastern stock markets to facilitate integration are critical factors to be noted by other stock markets in the Middle East that would want to follow the same process.
The integration of stock market would be a stepping stone in the realization of the spirit of integration championed by Middle Eastern countries. Conflicts among the countries have been witnessed in the past and there have been efforts to unite the countries along political, social and economic fronts. This research will highlight the integration on an economic front. Stock market integration will bring the participation of these economies which create a better understanding of one another in many respects. Economic integration is a big milestone in the realization of Middle Eastern peace.
This study will analyze the importance of stock market growth which necessitates the integration of stock market in the Middle East. This information would be important for future markets in analysis of the characteristics of markets that can integrate effectively. The study of the five stock exchange markets (Cairo, Kuwait, Abu Dhabi, Dubai, and Amman) would be of use to other Middle Eastern markets in understanding of the factors that need to prevail for integration.
Benefits of integration such as sharing of risk portfolio become useful in the study of markets and understanding of stock market dynamics. It would be useful information for future researchers as well; for instance student bodies and government organizations in having a glimpse of the nature of stock markets in the Middle East. Economists, business people and managers would find the analysis of stock market integration useful in making informed decisions.
Proposed Research Questions
- Does integration have to occur among highly performing markets?
- What do stock markets gain from integration with other markets?
- What role does technology play in the integration of stock markets?
- Is stock market integration a new business reality?
- Are stock prices affected by integration of markets?
- To what extent does capital restrictions law limit gross capital flow across international markets?
- Can stock market integration be able to sustain in the long run?
- Does international conflict affect the ability to integrate international markets?
- What are the limitations to International market Integration?
- H1a: The Stock Markets Integration in the Middle East can be done regardless of the performance of participating markets.
- H2a: Emerging Stock markets in the Middle East gain more credibility from integrating with other Markets.
- H3a: Technology is an integral part in the transverse of geographical boundaries and creates efficiency in markets.
- H4a: Emerging Middle Eastern Stock markets integration is a new business reality.
- H5a: Share prices rise with integration of the emerging Middle Eastern stock markets.
- Capital Law limits the flow of gross capital funds across geographical borders.
- H6a: The emerging Middle Eastern stock markets integration can sustain in the long run.
- H8a: Global financial crisis don’t affect the ability for the emerging Middle Eastern stock markets to integrate.
- H9a: Lack of transparency in trading is a limit to the emerging Middle Eastern stock markets integration.
Overview of Studied Financial Markets
Past studies have been made about financial market integration in other markets across the globe. In relation to constant financial flows (especially short term in nature), it becomes prudent to examine how the markets operate so as to realize a stable financial market. A study done to analyze the Indian financial market identifies the central Bank as a major player in regulating foreign exchange markets. Some policy measures have also been combined with change to enhance modification and integration of some markets. According to Jan (2000), the level of financial integration in the world has increased tremendously during the period of 1980 and 1990. The biggest motivator towards this trend had been the increased willingness to take more risks in equity investments for higher rates of return and a willingness to diversify investment portfolio to overseas markets (Eichengreen, 2001). The same study done in Indian financial markets confirm that the laxity in capital restrictions had also contributed to an increase in foreign market integration. It also seeks to further confirm that deregulating financial markets and improving the general economic environment to favor trade through the introduction of market reforms had also added to this course (Jan, 2000). A subsequent net capital inflow to developing countries has been observed in India. Integrated financial markets have therefore been noted to provide an avenue for oversees investments and also diversifying the portfolio for investments (Adnan, 2009).
Financial integration of markets has however been noted to facilitate the borrowing of funds in light of economic shocks. The gains that are realized out of integration which include welfare gains are also very eminent. It has also been observed that by penalizing countries for adopting bad policies and rewarding countries that have adopted better technology, it’s possible to realize a disciplined economic environment. This would eventually translate into greater stability for the overall economy. Further studies in India regarding financial openness have been noted to increase the depth of financial markets on a domestic level. This will then lead to an increased financial arbitration achieved through the lowering of costs and removal of monopolistic tendencies or cartels. As a result the cost of investment will be lowered and an improvement of resource allocation witnessed (Jan, 2000).
In Europe, the launch of the single Currency was noted to have necessitated stock market integration. The single currency was incepted in January 1999 and was characterized by a period of regulatory harmonization and increased stock market integration during the period of 1990s. There was also an increase in convergence in bond yields and stringent regulations of fiscal policies. Inflation rates were also converged among the countries that took part in the integration. Countries that never took part in the Euro zone integration for instance United Kingdom, never showed an increase in stock market integration (Daly, 2003).
Studies affirm that the integration of financial markets in Europe is a direct relation of ongoing efforts to integrate the European countries both politically and economically. Economic integration was a fundamental initial part towards realizing this objective. Even though the European market integration has had its own independent rewards, it’s affirmed that it has taken significant compromises between member countries (Priestly, 2010). A set of regulatory policies were established to ensure the countries operated in a regularized economy. This was the first step made to ensure there was a common ground for trading among all the nations.
India also records the same trend in stock market integration. It has been greatly facilitated by the inflow of funds from foreign investors and consequently revolutionized the way Indian Stock exchange operates; among them creating a link between capital and forex markets. The market has also been liberalized to allow trading for non – resident Indians, persons from India and corporate bodies. In the past, the purchase of shares had to be approved by the RBI but the trend has changed, such that there’s no prior approval from anybody (Hansda, 2002). There has also been further integration between the financial markets in Latin Countries and the US, more specifically Chile, Mexico and the U.S. The dynamics of this financial market integration have largely depended on global risk factors. Integration in this market has also been noted to be vibrant when the stock prices exceed some limit.
Studies of Financial Market in General
The biggest deterrent to financial market integration is capital controls (Jan, 2000). The effectiveness of stock market integration is observed to be stronger in emerging markets than developed ones (Masih, 1999). In financial integration of markets, the risk involved in investing is shared across participating investors and the compensation for sharing risk is also distributed across assets (Durand, 2001). It’s also inherently obvious that if there are capital restrictions across the borders then different investors will demand different compensation for the risk shared.
In some markets, restricted equity can only be held by domestic entities but unrestricted equity is held by both domestic and foreign markets. The price of both restricted and unrestricted equity is however same because of the price capital laws to prevent disparity (Eur, 2002). A similar situation is witnessed between official and market trading rates, or between market price and net market value (Pritchett, 2000). Difficulty is however experienced when trying to compare inter-country capital controls (Kołodko, 2005). Controversy and conflicts of interest are especially important for countries to get over first before trading though (Ragunathan, 2009).
A common ground for the realization of economic integration is the realization of harmonized laws and regulatory requirements (Stijn, 1995). The formulation of these regulations should also be done through equal individual contribution among member states. It might however be difficult to obtain a consensus among member states as well as achieving a common stand on specific wording regarding directives (Corhay, 1993). Instead of trying to formulate a common set of rules to govern member states, it would be prudent for the various markets to adopt a strategy of common recognition (Swanson, 1987). Under a mutual recognition, only essential requirements would be emphasized; thereby establishing only minimum standards to enable effective trading to take place. The implementation part of the law should then be left to the various markets in their domestic framework (Zhang, 2006). This is only possible if member states share a similar economic view and are willing to see the vision both politically and economically.
Member states should also be flexible to allow their markets to be regulated by foreign policies (Throop, 1994). The adoption of a mutual recognition of member states isn’t free from disputes but it’s much easier to side step conflicts in this framework than in trying to come up with harmonized regulations (Tai, 2007). It might also be regarded as a destructive process when lenient rules are formulated and markets take advantage of this by migrating to such countries through legislative loop holes (Claessens, 1995).
Transparency is also very critical in integration of markets. It is equated to ensuring quality of trading (Throop, 1994). It also implies the scope and updating of information with regard to data used in trading. With Middle East opening up its markets to foreign investors, the only way to ensure investor security is through transparency of trading. Some sections however argue that limited secrecy regarding trading transactions is critical to the safeguard of stock market traders and liquidity in the market (Simon, 1996).
Middle Eastern Stock Market
There are reports of the Middle Eastern Stock market to undertake further privatization of its stock exchange to open a bigger and better financial environment (Pritchett, 2000). Dubai International Financial sector has also been established to regulate trade in the market; it’s however autonomous. Saudi Arabia, Bahrain and Qatar have copied this system because of its success (Salehizadeh, 2009). Foreign brokers and bnks are expected to come aboard because of the realization by Middle Eastern economies that technology is an integral part in financial market integration (Pritchett, 2000). Dubai International financial exchange is currently adopting a strategy based on the increase of products in its array of existing ones. It also seeks to build financial equity and establishment of a growth membership base (Pritchett, 2000). Already there are trading partners in the United States and Europe and there are still plans in place to have members in Asia too (Pritchett, 2000).
Technology is however expected to effect this integration and improve the stock market’s integration and modernization (Pritchett, 2000). Popular acceptance of this integration is based upon a platform of common shared values and cultural similarities among trading countries. This view has been supported by the huge similarities among member states of the European financial markets. The transformation of Middle East into a further deeper trading block is necessitated by the numerous leaps the countries have made in transportation and communications sectors (Carter, 1996). This can be evidenced through ongoing infrastructural expansion in the United Arab Emirates to cater for increased growth of its economy.
The presence of institutional structures developed over the last few decades is also in place to facilitate the integration (David, 2008). Once an anatomy of integration is formed, then economic forces will lead to further deepening of this trend towards integration. Potential gains from integration (not only from capital markets) have been noted to increase the overall gross domestic products of the trading blocks (Azzam, 2002). This is a depiction that various economic stakes are in play apart from political motives (Denizer, 2001).
Integration process is usually within a greater context of international integration encompassing political, social and economic aspects. This is a cause that has been pursued by many Middle Eastern nations in pursuit of peace and stability within the wider Middle Eastern context. The same situation has been replicated in the integration of European markets that has facilitated the goal of integrating Europe’s economies in the wider European Union context which has been pursued for over 40 years. Trade restrictions have obviously been relaxed to allow for this (Pritchett, 2000).
Stock market integration among the Middle Eastern economies isn’t smooth sailing though; it requires enormous political will in overcoming the hurdles of losing national identity and other factors (Cordesman, 2006). This situation has also been depicted in the European Financial Market integration. The Middle Eastern stock market is definitely expected to change after integration; there are a few rewards to be gained out of this just as it has been observed in the integration of European stock markets (Roberson, 1998).
The adoption of technology in the Middle Eastern economy has greatly facilitated the integration of markets in the region. Tremendous gain in technology as a pillar of the economy besides oil has led to further growth of an economy already built through oil trade (Fujii, 2002). With the emergence of a strong telecommunication market, there has been considerable growth in the Middle Eastern market which in turn led to a vibrant stock market that now embraces integration. There is also a resultant link between growth and integration. The high capital injections to enable economies have a vibrant stock exchange have also been necessitated by an improved economy. The total GDP for the countries in this study (United Arab Emirates, Jordan Egypt and Kuwait) is big enough to warrant a vibrant stock exchange.
There is also an inherent similarity in governance laws between these markets seeking to integrate. The European Law was observed to have harmonious regulations by the European Union and an equivalent is needed for effective integration in Middle East. Through this, the nations are able to increase their total welfare. This is however a result of geopolitical reasons effected by their ruling class to ensure greater economic integration in achieving political objectives (David, 2008). The democratic relations ruined by Middle Eastern conflict and disputes with America were to be rebuilt in the integration of economic forces. This is a greater plot to achieve economic superiority in the global map (David, 2008).
In trying to understand the integration of stock markets in the Middle East, recognition should be made regarding the role of institutions in making this experience a reality. It should however be noted that the circumstances prevailing in the integration of Middle Eastern stock market cannot be assumed to be a model to other regions globally. The unique composition and the history of the countries’ economies make its situation unique to their operations only. It cannot be assumed for example that the factors that led to the integration of the stock market in Europe would apply in the Middle East. European Union has its own unique institutions to fit with its economic landscape. The geo-political factors and countries’ history are also unique to its market.
However, subsidiary is very important for the integration of Middle Eastern markets in the sense that decision making should be made at the lowest levels. This is because the decisions made are going to mostly affect the lowest levels of the integration process. When actions at a National level are unreachable, then efforts should be made to reconcile markets at the community level. This might involve individual companies and organizations at a level stage. Two levels of economic integration should however be realized for effective integration of markets: the realization of a common currency and creation of a common security commission for the communities (Robalino, 2005). In comparison, it has been claimed that the realization of a common currency in Europe has greatly facilitated the financial market integration in the European stock exchange.
It’s however important for a common body to oversee integration efforts than for individual markets to integrate by themselves. This would be fruitful in realizing common fair objectives for all the countries involved. In Middle East, the steps have been undertaken by the Arab Union and other smaller economic blocks. Similar trends have also been seen in the Integration of other markets for example the European Market having been overseen by the European Union (David, 2008). In the absence of these factors, a realization of long term commitment towards economic integration is doubtful (Sabri, 2002).
Financial integration is only possible if markets are performing well to warrant a possible merger. The relaxation of rules to allow for foreign trade investors is a clear manifestation of this. It would impact positively if markets sought to expand by allowing more investors to take part in this market. Moreover, when markets practice a common financial law which in this case would be international market practices, it only seeks to integrate with other external markets thereby increasing its financial capacity. It would however be important to note that co-integration is a measure for financial integration.
This study will seek to obtain information from the stock markets in United Arab Emirates, Jordan, Kuwait and Egypt. These markets are among the biggest in the region and will provide adequate information on a macro economical perspective. Daily stock price indices will be easily obtained from the five stock markets and would be critical in the analysis of the performance of the markets. This study will also source data from the Arab Monetary Fund which is integrally rich in information regarding the Arab Stock market. The data stream will also be in use together with emerging data base from International Finance Corporation. This is because the Middle Eastern economy is among emerging markets in the world and very critical in the analysis of how they utilize their potential in growth. International Monetary Fund will be a useful information data base on economic data coupled with International financial statistics. Morgan Stanley will also be used to provide information on a much broader perspective. Data relating to previous researches done on other stock market integration will also be used.
This research study will utilize the most recent econometric techniques in coming up with reliable information for accurate results and for measuring financial integration. These techniques will be important in coming up with correct statistics of data; for instance GDP and stock market activities. Though statistics keep on changing by the day, this study will aim at obtaining the most reliable information through the most recent data. Techniques used in obtaining data for example the different methods used by economists in coming up with GDP and GNP statistics will also be put into consideration.
The Granger Casualty Model will be used to test relationships between different variables in the economy, especially in determining a possible outcome. For instance the growth of the core Middle Eastern economies (United Arab Emirates, Jordan, Egypt and Kuwait) will be analyzed in relation to necessitating stock market integration. The growth of these economies probably necessitates the integration of stock market to better handle the large volumes of trade and expected increase in volumes of trade. The variables in study here will be the economic growth in relation to stock market integration. This relation is expected to have a positive co-relation and the Granger Casualty Model will be used to confirm this at the conclusion of the study.
The study will also utilize the Johansen-Juselius approach which will be based on three variables that estimate error correlation at the same time, with an emphasis on the long and short run effects. This method will seek to analyze the number of relationships that are co-integrated in the financial markets. It will establish whether there are any co-integrating relationships; for instance, whether the level of economic growth in United Arab Emirates will affect its ability to effectively integrate. Secondly, the model will analyze at least one integrating relationship such as markets and culture of the countries seeking to integrate need to be similar for effective financial market integration. The third relationship in this model will be analyzed when there are at most two co-integrating relationships. This could be depicted in a relationship whereby the similarity in market and level of economic growth for the country are essential for effective financial integration. Johansen-Juselius model will therefore seek to analyze these relationships.
These two sets of models (Johansen-Juselius and Granger Casualty Model) will therefore seek to establish the relationship variable that might exist in the Middle Eastern financial market. The Johansen-Juselius model will seek to analyze the relationship between two or more variables and will go a step further in analyzing the short and long term relationships. Granger Casualty Model will estimate the possible outcomes between the variables (Shilling, 1996).
In depth analysis of Johansen-Juselius model will show a corresponding number of hypotheses with the number of variables in play. The main strategy for this model is to establish whether one variable relationship is a multiple of the other. In addition, it will also seek to find out whether one variable is a linear relationship of the other. The Granger Casualty Model will also test the existing relationships and estimate an outcome.
These guidelines for data collection techniques will be used for measuring company integration approach together with short and long term integration between markets. It will also seek to analyze the co-relation for measuring the short run relationship between markets; for instance, the similarity in co-relation between the compositions of economic blocks. The Granger casualty model will also be incorporated in counterchecking the conclusion thereby drawing a comparison between actual and expected results.
Limitations of the Study
This study will be limited to changing economic statistics that differ by the day. The area of expertise to be analyzed centers on the analysis of the stock market and is usually characterized by changing price indices, usually on daily or hourly basis. The study will rely on the same data for correct formulation of results and might therefore be limited in this respect. Other economic statistics like the GDP and GNP are also varying statistics that depend on the method or technique of their formulation. This might lead to varying or untrue data. The speculative tendencies in the stock market activities may also impact on the integration process. This may lead to a compromise on the validity of factors to be formulated as possible reasons for the integration of markets.
The focus on five stock exchange markets might not be adequate enough for correct analysis of the entire integration of the Middle Eastern stock exchange. The activities of other major stock exchange markets might also influence the integration process. It would however be cumbersome and tedious to analyze all the markets in the Middle East and therefore, an assumption is to be formulated on the grounds of the five stock exchange markets.
The use of Granger casualty model also has it’s limitations in the sense that some other variables might be in play to affect the overall expected co-relation outcomes. Manipulation of one variable in the analysis like the growth of economy isn’t expected to influence the other. The reverse relations in the model might also be limiting; for instance, an increase in economic growth as a variable would impact on the integration of stock markets in the Middle East but the Integration of the Stock markets would not impact on the growth of participating economies. The Granger model is very effective when it comes to many pairs of changing values. When tackling or when faced with several variables, this model may however be misleading.
Results and Discussion
Financial liberalization of economies in the Middle East has played an important role in the expansion of the stock market to enable the integration of markets. A laxity in capital regulations has seen an increase in investment capital flow especially from foreign markets. The acceptance by participating economies to be guided by foreign laws will also create a common ground of operations that enable the markets integrate from a common practice. Countries in Middle East have also diversified their economy from over-reliance on oil to adopt more technological changes. This is expected to impact positively on integration activities. The inflow of international expert brokers and financial experts is expected to increase as well due to technological advancements. Technology is also expected to transcend geographical boundaries as Middle East seeks to establish a presence in Asian markets.
The global financial crisis (GFC) was a wake-up-call for Middle Eastern economies to diversify their portfolio so as not to be susceptible to global occurrences. The severe fall in oil prices for example put a dent on most Middle Eastern economies especially United Arab Emirates and Kuwait which majorly depend on oil for their economic survival. The global crisis saw a fall in international oil prices, stock prices and a consequent profitability of industrial sectors. There is therefore a need already realized for these economies to diversify and efforts are already underway through the development of the telecommunications sector to create a more stable ground for the economy. There is also an effort to invest oil revenues in other assets that might sustain in the long run. Due to the same causes, the Middle Eastern economies are slowly realizing the need for integration of markets to create a more formidable economic force to sustain in the long run (Amman Stock Exchange, 2010). The relaxation of capital law to allow for the influx of gross capital funds through the economy is a commendable effort towards this direction (Robert, 2006).
The Middle Eastern economy is greatly built on the reliance of oil as a formidable export good. The heavy reliance on this commodity in most of the world’s markets has seen an improving power of these economies especially of United Arab Emirates and Kuwait. Integration of stock markets will further strengthen these forces into great economic blocks in the short run but further analysis should be done to shift the over reliance on oil as the world seeks to “go green”.
Stock market integration is a good move for these economies because they enhance integration of other economies; even those that don’t rely on oil for their superiority for instance Egypt. This is a great strategy for these economies to diversify their portfolio to be more stable markets. Middle Eastern conflicts like the one witnessed in Lebanon in 1958 will be minimized through economic integration as focus shifts towards economic agreements being formulated (Page, 2004).
The trend for financial market integration is however commendable in reaping the benefits that come out of it. It’s notable that the foreign markets integration is dependant on policies and structures set up by institutions. This would be a good frontier in speeding up of integration processes if the institutions were enhanced. Even though the efforts to increase financial market integration could be enhanced to develop a seamless market consortium, the policy base for this merger should be based on varied interventions (Phylaktis, 2002). A mechanism should therefore be established for surveillance purposes in distinguishing basic fundamentals to the results of the market reactions. This can effectively be done through forces of transition which would guarantee financial stability but at the same time gaining heavily from the benefits of financial integration.
Conclusions and Recommendations
Transparency will go a long way in improving share prices as Middle Eastern economies integrate to foster trade among markets. Investors would feel very secure in investing in these markets and it’s important that the market players understand their contributions in making Middle East stock market a competitive entity in comparison to other developed markets (like United States and Europe).
The development of one currency for trade in the economy is going to ease the integration process and make it much faster (Kose, 2003). Economic integration is the new business reality and Middle East should be at the forefront in embracing it. Though systems are already in place, like the establishment of a common currency, the Middle East economy should integrate much quicker to keep up with other economies that have set a precedent in this field. The use of the Euro for European markets and the Dollar for American markets is a good example. However, emerging stock market integration is expected to grow the Middle Eastern economy in leaps.
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