Contradictions Among Analysts Regarding Gulf Stocks

  • 2 March 2006

The current fluctuations in the Gulf stock markets have baffled both analysts and dealers who find no convincing explanation for the downward spiral on a daily basis. In their attempts at explaining the crisis, experts end up with diametrically opposite points of view. Some of them give glad tidings of an imminent upward surge, while others warn against a worsening of the crisis in times ahead.

The truth, which no party has revealed yet, is that the present stock market situation is a natural outcome of the technical flaws and unfavorable trends that have been developing for quite some time. In the absence of transparency, dealers have resorted to speculation at the expense of investment. In fact, speculation has become so extensive and deeply rooted that it is no longer considered an exceptional practice. This has impaired the decision-making process of investors, which has led to dramatic fluctuations in share price movements. Unfortunately, speculation has turned investment into a form of gambling and those who made handsome profits initially, have drawn several others into making quick gains. Some of these people have recently fallen prey to rumors and false impressions while making transactions. The limited number of prominent companies operating in the stock market has also exacerbated the crisis. The unusually steep rise in share prices, particularly the record levels reached by leading companies in the past, has played a major role in causing market disorders, which has badly hurt a large number of investors.

In the light of these facts it will be difficult to predict the state of Gulf stock markets in the coming days. The situation demands caution and small investors are particularly advised to keep away from speculation and opt for investments that can withstand stock market fluctuations. It is currently difficult to make easy profits in the domestic market, which will have to undertake a professional approach in the upcoming period.