The IPO stream that used to run in excess of $10 billion a year dried up almost completely with no new issuances in Q4, 2008. Since then, those waiting for market normalization have been consistently disappointed.

Total GCC IPOs in 2009 fell short of $2 billion, a figure that was only marginally exceeded in 2010. Issuance in the first three quarters of this year remained below $600 million.

Apart from their modest numbers, the regional IPOs have tended to small, with only a handful of landmark issuances. 2009 saw Vodafone’s $952 million listing in Qatar and this was followed by Knowledge Economic City’s $272 million issue in May 2010, Nawras’ (Omani Qatari Telecommunications Company) $474.6 million Muscat listing in September, and Mumtalakat’s $389.84 million sale of a 11.5 percent stake in Alba in October-November 2010.

There have been no comparable offerings this year. The Gulf IPO scene has proven also geographically uneven with Saudi Arabia the only market to record quarterly activity throughout 2009-2010.

In 2010, the eight issues in the Kingdom made up 70 percent of the regional total.

This year, by contrast, has seen only two Saudi IPOs worth just over $200 million.

The UAE and Oman have been the only other active regional markets.

Following three years of effective stagnation on the regional IPO scene, there are few signs of a near-term turnaround.

A certain amount of activity can be expected from the so-called mandatory IPOs, companies receiving large government subsidies or operating in sectors such as insurance where listings are seen as a way of fostering governance standards and ensuring appropriate capitalization.

Similarly, there is a potential for even substantial government-sponsored or partial privatization IPOs, including some of the regional carries.

Qatar Airways has signaled its interest in going to the market in the near-term, while Saudi Arabian and Kuwait Airways are going through restructurings that are expected to culminate in IPOs.

Beyond this, some regional private companies, including family businesses, are exploring IPO opportunities.

The key challenge for the regional market remains the stressful secondary market environment.

In spite of the established track record of macroeconomic stability and favorable growth prospects of the regional economies, the regional bourses, where trading is still dominated by retail investors, remain acutely sensitive to external disturbances. And these, of course, are numerous at a time when the world economy is still mired in most severe and persistent economic crisis since World War II.

The economic fundamentals in the West are fragile after years of leverage-driven growth and, more recently, stimulus spending.

These structural weaknesses in turn present the risk of substantial discontinuities, such as a potential break-up of the euro zone, which would impose severe real economic costs the world over.

The market environment and regulatory risk alike are depressing financial intermediation and there is little in the fundamentals to fuel a sustained rebound.

The basic near-term market outlook, therefore, remains one of volatility.

The echoes of this will be felt also in the GCC, which leaves a baseline outlook of sporadic IPOs with numerous delays. — , [email protected]