What's Going on in Gulf Stock Markets?

  • 15 February 2006

It appears that the confusion and volatility besetting the Gulf stock markets may not end soon but will continue to grow, despite various analyses and assurances made to the contrary. In most cases, such views are widely circulated in the Gulf media by writers and analysts who seek to influence the markets to promote their own interests. One has to take serious note of these manipulations and clash of interests. Besides, many Gulf newspapers carry inaccurate analyses made by self-styled experts who do not have the required qualification or technical expertise to make sound scientific analysis of market trends. The problem has exacerbated due to lack of investment awareness among Gulf stockholders, whose numbers have suddenly risen to over nine million. Consequently, the market value of shares owned by leading Gulf companies has also risen to unjustifiable levels. Due to lack of vision, domination of speculation in a market that suffers from lack of diversified investment opportunities, all parties have failed to set a ceiling for the markets, either deliberately or out of ignorance. By fixing a ceiling, markets are able to foil artificially generated upward trends. This leads to relative stability in the markets and circumvents phases of sudden regression and collapse.

Some analysts argue that the Gulf market situation is exceptional and cannot be subject to practical economic calculations and measures. This line of thought is unacceptable as it will pave the way to unwarranted speculations and eventually suppress the objectivity needed for making accurate predictions of share price movements, especially in a market filled with dealers who hate to think about the possibility of any fall in share prices.

All facts indicate that the variables responsible for the rise in share prices in the Gulf market last year will be difficult to maintain this year. The Gulf market, which has maintained an upward trend for quite a long time, may lose its momentum considerably this year. Price exaggerations have taken this market to critical levels beyond which it is difficult to maintain the same rates, unless significant changes occur at more than one level to boost market activity. Otherwise, the upcoming period will see greater volatility, as it is becoming difficult to make gains in the Gulf markets. In a market governed by huge speculator alliances and shortcomings in transparency, neutral analysts should be called for assessing the real worth of company shares and for improving the quality of information on share prices.

Besides, there is a need to find highly competent financial brokerage that promptly responds to market variables. The present state of affairs necessitates the promotion of investment awareness, not only in stock markets, but also in all other fields of investment. Only then, market investment will become a real asset for Gulf companies.