Flip through the latest issue of Gulf Weekly.
Since the crash of 2006, Gulf stock markets have been on a roller coaster ride trying to find a footing in a region that has tasted the first prolonged downswing after several years of boom.
Gulf investors lost millions of dollars as they learned the hard lesson that anything that overheats will ultimately break.
Markets were slowly recovering when the global financial crisis and its regional backlash took another heavy toll on the bourses.
The notion that the Gulf was safe from the global stock market volatilities as long as oil prices remained high was put to a reality check in January 2009 when Arab stock benchmarks suffered their biggest declines in three years.
Are stock prices in the region in any way tied to oil prices? To tell the truth, there is no such direct correlation in the region because few energy companies are listed on the Arab bourses.
Indirectly a connection does exist. That correlation is largely based on the belief that rising crude prices will boost government revenues and therefore expenditure on infrastructure and development projects, enabling listed firms to benefit.
That is why a surge in oil prices has failed to have a sustained impact on regional stock markets as they dived by about $38 billion over the last two weeks of June after gaining nearly $41 billion in the two weeks previous to that.
Official figures showed the bourses of the UAE, Saudi Arabia and Qatar were the main victims of the loss while Kuwait and the smaller exchanges of Oman and Bahrain recorded relative stability.
After soaring by nearly $41 billion in the first half of June, the market capitalisation of the seven bourses in the GCC tumbled by nearly $38 billion to $655.9 billion in the second half, according to the figures of the Joint Arab Stocks Data Base at the Abu Dhabi-based Arab Monetary Fund.
A breakdown showed the UAE, the second largest GCC exchange in terms of capitalisation, slumped by about $10 billion to $134.5 billion after it was a key gainer in the Arab region in the first half of the month.
Saudi Arabia, by far the largest and most speculative stock market in the region, accounted for nearly 60 per cent of the loss, with its market capitalisation plummeting by about $23 billion to $289 billion on June 25.
Qatar declined by nearly $5 billion while Kuwait, one of the largest bourses in the Middle East, stabilised at about $123 billion. Oman also remained unchanged, while Bahrain edged up by about $200 million.
Moreover, concerns over the exposure of Gulf banks to two leading Saudi Arabian groups in financial difficulties have sent banking stocks tumbling across the region.
Saad Group, owned by billionaire Maan Al Sanea, and companies owned by the Algosaibi family, one of the most prominent Saudi families, have been forced to restructure their local and international debt, estimated at between $15 billion and $16 billion by bankers.
Financiers are becoming worried that there could be further trouble lurking in the widespread Gulf practice of 'name lending' to prominent families and individuals.
Saudi banking stocks have shed 12.5 per cent since June 1, when Saad Group first admitted that it planned to restructure its debts, outpacing the nine per cent decline of the Saudi stock market. Samba Financial Group, a leading Saudi bank, has lost nearly a fifth of its value since early June.
Overall, banking shares have performed better in other Gulf markets, but certain banks have slumped on worries that they are exposed.
Abu Dhabi Commercial Bank, which has admitted exposure to the Saudi groups, and Commercial Bank of Qatar, which has so far declined to comment, have both declined about 18 per cent since early June. The ADX and Doha Securities market have lost 2.5 per cent and 13.6 per cent respectively.
To make matters worse, limited transparency, a ban on short-selling, a lack of diversification and the region's absence from key indexes have kept Gulf blue-chip stocks off-limits for foreign investors.
Analysts say that although oil is now around $60 risk-averse overseas funds may not invest unless transparency improves.
Investors are worried by the precedent set by the on-going suspension of trading in Dubai-based mortgage brokers Amlak Finance and Tamweel ahead of a proposed merger.
The two stocks have been suspended since November 2008 as their fate is reviewed by a federal committee charged with merging the firms with two other state-controlled banks.
