Gulf bourses bounce back

The Saudi, Kuwaiti and Bahrain bourses all enjoyed a good week, regaining some of the ground that they have lost over the past month.

Hectic trading pushed the Tadawull all-shares index up 1.7 per cent to 2,488.47 points. The index is now 2.4 per cent up on its January 1 opening level, and so this week's bounce back could mark a serious change of direction.

Stronger oil prices and Opec optimism that Russia would fall into line and continue to support output curbs, helped to fuel market optimism. And all the blue chip Saudi stocks were in positive territory for the week.

It was the same story in the Gulf's second largest stock market, the Kuwait Stock Exchange where shares closed the week up 1.47 per cent at 1,790.2 points, and are 4.72 per cent higher for the year. Strong profits growth in 2001 and a flow of liquidity into the market pushed share prices higher, said brokers.

Bahrain also basked in a second consecutive week of positive activity, and share prices advanced by 1.5 per cent to 1,762.76 points.

Could this be the start of a major Gulf stock market rally? Or is this just a sign that investors had a good Eid Al-Adha holiday?

Certainly the bourses do seem to be finding a new direction after a lackluster first two months of the year. And the previous pessimism about the oil price outlook has receded. Indeed, oil prices are currently back within Opec's old $22-25 per barrel range, the highest for five months.

Provided the post September 11 recovery in local and world trading patterns continues, and the oil price holds good, then this week's rally could turn into a bull run. If Sheikh Yamani's researchers are right then $25 plus oil prices will be seen in the second half and that will send stock prices flying.

It still is a bit early to wave a red rag at this particular bull, but the beast does seem to be lurking in the shadows. Bolder investors might choose to throw caution to the wind and get in now before prices spike higher.