Bursting bubbles in the gulf

We have mentioned over the last six months, that the Gulf markets, and in particular the Saudi stock market had gotten ahead of itself. The metrics we used were always simple to understand: the market capitalization had surpassed the national productive economy by a measurable distance. In fact, at its peak in February of this year, the market capitalization of Saudi Arabia at its peak had reached nearly four times the value of the GDP. To put this speculative fervor in perspective, at its manic NASDAQ-driven peak, the US market capitalization had hit 1.75 times the GDP. We use the Saudi market for analysis since it is the largest of Gulf markets, and actually has become one of the largest emerging markets in the world. The flood of IPOs in a fairly arcane and unregulated market led to an unhealthy, almost parabolic trajectory. This, coupled with excess small public participation