Another good week for GCC bourses

Even traders at the unloved Muscat Securities Market were left smiling last week with gains across the board in GCC stock markets. Oil prices headed north of $26 per barrel, and local bourses followed the Black Gold upwards, as did the price of gold itself which topped $303 per ounce.

The MSM posted a two per cent rise to 164.19 points, and is up by 8% so far in 2002. This is much improved on the 24.4% loss recorded by MSM investors in 2001, and is partly a rebound from artificially depressed share prices.

Corporate results for 2001 in Oman have not proved as poor as the market expected. Hence there has been a rally in blue-chips such as National Gas and Bank Muscat.

The Gulf's two largest stock markets also had a good week. The Kuwait stock exchange closed at a new year high of 1,862.8 points, up 1.6% and 8.9% ahead so far in 2002. But traders warned that prices could slip in next week after investors had finished placing dividend income.

In Saudi Arabia the all-shares rose by 1.4% to 2,594.14 with blue-chips like Saudi Basic Industries Corporation taking the market higher. The Bahrain Stock Exchange managed a 0.2% gain to close at 1,761.46 points, and Qatar gained 1% to finish at 1,685.37 points.

What is the outlook now for GCC shares? Are investors now too late to jump in to this rising market?

If you listen to oil traders the answer is probably that GCC shares have further to rise in the short and medium term. A faster than expected recovery in the global economy seems to be impacting on oil prices which also contain a significant Iraq-threat premium. Unless Opec members suddenly open the spigots, and the Middle East becomes a more peaceful place, then shares should be in for a good run.

It is actually quite possible that this new bull rally will go the full course and regain the highs of 1998 and even surpass them. That would make GCC shares an excellent investment, provided that investors remember to cash-out at the right time.