Page 247 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Capable Capital: The GCC as a Source of Capital 229

continued throughout 2006, wiped out most of the gains made since
early 2005. As of June 2007, however, the market was up around 250
percent from its 2001 level. The investors most hurt by the correc-
tion were those who came in at the peak of the frenzy in 2005 and
2006—and these, unfortunately, tended to be the least sophisticated
and most vulnerable retail investors.
Table 8.2 shows the change in equity market values across the
GCC countries between 2001 and early 2006 (the boom period) and
between 2001 and mid-2007. As the data shows, all markets
remained well above their pre-boom values even after the correc-
tion of 2006—markets in Kuwait, Qatar, and the UAE maintained
values several times greater than the 2001 figures.

TABLE 8.2
Change in Equity Market Values across the GCC Countries between 2001
and Early 2006

Market Change, Market Change,
Country 1/1/01 to 2/1/06 1/1/01 to 6/1/07
Saudi Arabia 629% 186%
UAE 605% 393%
Qatar 682% 491%
Bahrain 91% 77%
Kuwait 453% 589%
Oman 131% 153%
Source: Shuaa Capital

It is worth noting that market corrections in Kuwait
and Bahrain were far less pronounced than those in Saudi Arabia,
the UAE, and Qatar. One reason for this is that Kuwait and
Bahrain had more sophisticated stock markets—Kuwait’s being the
first in the region and Bahrain’s being heavily weighted toward
shares of more stable financial institutions. Both exchanges also
enjoy a high proportion of institutional investors, who are less
likely to succumb to the temptations of valuation bubbles. Oman’s
stock market, quite interestingly, grew at a healthy pace in 2006—a
sign that it was insulated from the frenzy occurring in the other
GCC markets.