MSM and Kuwait power upwards

Oman and Kuwait were in the spotlight last week with investors in both markets knotching up impressive gains.

Shares on the Muscat Securities Market climbed 1.6 per cent to close at 166.84 points, the fourth week in a row that the market has ended higher. However, traders remained cautious as the MSM has disappointed before, with an upswing followed by an equally sharp downward movement.

More bullish observers thought that the MSM's internal reforms and efforts to promote greater transparency were finally beginning to have an impact. Last week shares in the main banking stocks were in particular demand.

Meanwhile, the Kuwait Stock Exchange added a further 1.8 per cent last week to finish at 1,896.2 points. It then sprinted past the 1,900 barrier at the opening of business on Saturday.

At the KSE the recent surge in oil prices is one reason for optimism, while the warmth of relations with Iraq displayed at the Arab Summit late last month and the signing of a no-invasion pact has done much to reassure confidence.

The Arab World's second largest stock market has long been highly responsive to regional events, and its rise over the past few weeks is a reminder that the higher oil prices that have accompanied the tragic events in Palestine are actually beneficial to the Gulf States.

In particular, budget deficits for 2002-3 look unlikely now, and investment plans are far less likely to be shelved with oil money flowing. Perhaps investor exuberance is rational after all.