GCC bulls continue to charge!

Last week saw a bullish, almost euphoric, mood on the GCC stock markets as investors responded to the collapse of Saddam Hussein's regime in Baghdad.

The Kuwait Stock Exchange hit an all-time high, the UAE bourse posted strong gains and at one point the Saudi Tadawul all-shares index crossed the 3,000 barrier for the first time, but was unable to hold the momentum.

Property shares have been particularly in demand in Kuwait and the UAE. Both countries stand to gain from a reconstruction trade boom with Iraq and a total investment as high as $100 billion is being talked about in Washington.

This would be the largest such investment since the Marshall Plan that followed World War II, and represents a huge capital injection into the region. The feeling among investors is that this investment when combined with still strong oil prices will result in a third great economic boom for the Middle East.

Viewed in that context, it is not surprising that property shares are in demand. Rentals and property values are surely bound to be one of the main beneficiaries in such a business environment.

$100 billion represents around a quarter of the entire annual GDP of the Middle East, and is thus an enormous economic stimulus. Moreover, it will not be applied in one year but spread over a five to ten year horizon, thus underpinning the wealth of the region for almost a generation.

Economic reform in Iraq will also almost inevitably result in economic reform in other countries. This will further add to the multiplier effect on regional economies.

Of course, it remains to be seen whether post-Saddam Iraq can manage to re-establish internal security, and present a viable interim administration to the world. But regional stock market investors are certainly reckoning on this happening.