JEDDAH, 8 June 2007 — With the exception of the Saudi market, GCC markets ended higher last month with the best gains being recorded in Qatar and the UAE. With two major IPOs witnessed in the month, Saudi Kayan in Saudi Arabia and Deyyar in UAE, investors were initially wary about the performance of the secondary markets but amid clear signs of fresh liquidity being infused in the markets by domestic and foreign institutional investors, speculators and retail investors rushed back to the markets.

“The UAE market was the best performing regional market with 14.5 percent gains for the month followed by Qatar at 11.2 percent as valuations in these markets had reached very attractive levels versus other regional equity markets and emerging markets in general. Consistent with our expectations, GCC markets (with the notable exception of Saudi) outperformed equity markets in North Africa and Jordan over the month after a long period of underperformance,” a regional stock market review for May said yesterday.

The Saudi Tadawul Index ended lower for the third month in a row and with the one percent loss in May, it is the only MENA equity market to show losses for the year, with the important observation that it is only the 15 percent gain in market leader Saudi Basic Industries Corporation (SABIC) that is keeping the index from showing larger losses. The market traded in a narrow range over the month with activity remaining focused on speculative stocks.

“Prince Alwaleed Bin Talal announced his intentions to take Kingdom Holding Co. public before July and the potentially huge offering, along with the news that there are as many as 55 IPOs in the pipeline for the remaining part of the year, seems to be already draining liquidity from the secondary market. The SR6.75 billion Saudi Kayan IPO saw very low subscription levels till the second last day but it was finally oversubscribed five times, which reiterates the high levels of liquidity that are available should investor sentiment more fully recover. SABIC has agreed to buy GE’s plastic division following its successful bid at $11.6 billion while Saudi Telecom is looking at acquiring an operator in Africa or South Asia to expand outside its home market and diversify its revenue stream,” said the review written by Khaled Al-Masri, executive partner of Rasmala, a regional investment bank headquartered at the Dubai International Financial Center, with operating subsidiaries in Riyadh and London.

After modest gains of around 2.5 percent in April, the Dubai market extended its gains in May with a 17 percent return for the month. The market was strong right from the start of the month and the strong momentum carried the market into positive territory year-to-date. There were several triggers for the sharply improved sentiment and trading volumes and the oversubscription of the Deyar IPO by a reported 10 to 15 times was an important factor. Trading activity improved substantially with indications of increased, and much welcomed, foreign institutional participation in the market.

Building on the momentum gained in April, the Abu Dhabi market index was 17 percent higher during the month continuing to be led higher by Etisalat and real estate sector stocks. Attractive valuations, liberalization of the real estate sector and first quarter results highlighting the capability of corporations to generate strong core earnings all served to attract domestic and foreign investors back to the market. Etisalat has increased its controlling stake in Atlantic Telecom to 70 percent by the acquisition of an additional 20 percent stake in the African operator.

The Kuwaiti market extended its gains for yet another month with a 6.6 percent return for May thus taking its year-to-date return to 14.1 percent and making it the second best performing market in the region after Morocco. Solid quarterly corporate profit results have helped the rally in the market to continue.

The Omani market extended its gains from April to end the month with the 6.8 percent gain taking its year-to-date return to 11.1 percent amid an increasingly vibrant corporate sector.