After the frenzy, what next for the GCC

We have spoken at great length, and on several occasions, in these pages about the Gulf capital markets and equities in particular. Twice, in the last quarter of 2005, we pointed to the excesses and overly euphoric market mood, especially in Saudi Arabia, where company valuations had reached astronomic and unsustainable levels. The mania subsided dramatically, and bubbles all over the GCC burst, leaving many small investors licking their wounds. In fact, the collapse was so rapid and devastating that one heard many anecdotes of people losing it all, betting on the stock market after borrowing money to do so. Ho hum. The driver of the equity rises had been primarily the macroeconomic factors supported by a high and rising oil price, which had moved from near $40 a barrel, 18 months prior, to around $77 per barrel. However, and due to the un-sophistication of most small investors in the