Great times for GCC investors!

Last week saw record highs in the exuberant Kuwaiti bourse and Saudi Arabia, with even the moribund UAE bourse picking up a bit of steam.

Saudi shares finished up six per cent on the week with the Tadawul all-shares index at 3,243.88 points, up by a thumping 28.8% since the start of the year. Most of the upturn has come since the start of the war in Iraq, and the recent terrorist bombings in Riyadh have not stopped the momentum.

Kuwait is giving professionals some cause for concern. The Kuwait Stock Exchange is up by 50 per cent since the start of the year with huge liquidity and great optimism driving up the market.

The KSE has a history of violent market corrections, and brokers fear that another one may be imminent. Certainly the market seems to be moving ahead of events, with the economic and security situation in Iraq proving more difficult to handle than originally thought, and indeed the war is not actually over yet.

On the other hand, the UAE bourse is at the other end of the scale, and up by a more modest 7.7% since the start of the year. Last week the Emirates Securities and Commodities Authority unveiled plans to more than double the number of listed companies by compulsory listing of public shareholding companies, and a committee to e-link the two trading floors.

The Emnex closed 18 points up at 2,359.54 last week. But with the market on a price/earnings ratio of 14.5, and a yield of 3.64 per cent the UAE bourse is surely set for a rally.

The economic outlook for the UAE is very good with excellent Q1 oil revenues compensating for the impact of the Iraq war and SARS on the non-oil sectors. But the UAE's stock market is poorly developed by comparison to Kuwait and Saudi Arabia, and it pays a penalty.