Saudi Arabia has been considering a wider opening of its market, the biggest in the region, for several years; currently, foreigners have only very limited opportunities to invest through indirect ownership and exchange traded funds that track indexes. 

There is no clear, public indication from Saudi authorities that restrictions will be lifted any time soon. Officials have said they want to move only gradually for fear of attracting destabilizing inflows of speculative money, and with funds fleeing Western markets because of the euro zone debt crisis, reforms could be particularly risky at present. 

But expectations are growing. A senior executive of Saudi Arabia's Bakheet Investment Group said last month that he expected the Kingdom to fully open its stock market to foreigners in the first half of next year. 

"Everything is ready. It is just a political decision needed from the higher authorities," Hesham Abu-Jamee, Bakheet's chief investment officer, told Reuters.

Such talk is helping to underpin the Saudi market, where turnover this week remained active compared to levels in the last few months, even as trading volumes fell to very low levels in most other Gulf markets. The main Saudi stock index moved sideways during the week.  The Tadawul All-Share Index (TASI) declined 0.1 percent to 6,220 points on Wednesday.

"All eyes are on Saudi Arabia getting direct exposure to international markets," said Rami Sidani, Dubai-based head of Middle East investments at Schroders. "That should happen next year." 

Ibrahim Masood, senior investment officer at Mashreq bank in Dubai, said: "A lot of the smart money has already positioned for the Saudi market opening up." The danger, he said, was that any extended rally prior to the opening could drive up valuations too much, resulting in a sharp drop after the event, as happened in Qatar's bourse after it opened to foreigners in 2005. 
 
DUBAI 

Gulf fund management circles hope an opening of the Saudi market would attract fresh foreign interest not only in that country but also in neighboring states. 

At present there is little sign of new fund inflows to regional markets. Dubai's stock index barely moved this week, remaining near multi-year lows hit in late October, and traded in extremely low volumes. The index slipped 0.1 percent to 1,387 points on Wednesday. 

"I believe our markets are going sideways," said Mohammed Ali Yasin, chief investment officer at CAPM Investment.   

"The low volumes in the last two trading sessions in the United Arab Emirates suggest that markets do not have enough power to break resistance levels technically."  

Qatar's index edged up 0.5 percent this week, closing Wednesday at 8,749 points, but it failed to make a strong effort to test technical resistance at 8,787-8,843 points, where it peaked in the second quarter of this year. 
      
EGYPT 

Meanwhile, a month-long rally by Egyptian stocks appears to have ended because of political uncertainty. The Egyptian index  sank nearly 5 percent this week as investors waited to see if the government would back away from a proposal to lay down principles for a new constitution in the face of opposition from many political parties. The benchmark fell 0.2 percent to 4,171 points.