The Relationship Between Saudi Arabia Stock Exchange and the Egyptian
Financial markets, and in particular the stock exchange market, play an important role in the economic development of any country whether it's developed or underdeveloped. Stock markets let investors participate in the financial achievements of the companies whose shares they hold. Investors realize that stock markets affect each other and are affected by each other too. This study aims at testing the degree of interdependence between Saudi Arabia that is a major constitute of the “States of the Gulf Cooperation Council” and Egypt. In order to investigate the nature of the relationship between the Egyptian stock exchange market and the Saudi Arabia stock exchange market, its extent and implications, this study uses descriptive- statistics such as "the mean, median, mode, standard deviation (STDEV) and skewness (SKEW), Pearson correlation coefficient and Linear regression analysis (Ordinary Least Square). The study builds on secondary data analyzed using SPSS (Statistical Package of Social Sciences) software and Stata application. The study concludes a set of findings: (1) There is a relationship between the Egyptian and the Saudi Arabia stock markets (2) The Saudi Arabia stock markets have effect (influence) on the Egyptian stock market (3) The financial crises are transferring (moving) from the Saudi Arabia stock markets to the Egyptian stock market and vise versa (4) There are countries - specific factors such as small overall market, individual company capitalization, thin trading, stock market scandals and opening up to foreign ownership that had increased the number of sudden shifts (5)The index return variations in the stock markets dependent to a great extent on shocks from within the region rather than from outside (6)The risk/return relationship in the both countries seems to be not only more advantageous, but also quite homogeneous.
Abdulaziz Ali Said Asseri
Prof. Nehale Mostapha & Dr. Amr Samy