Data from May is telling. The benchmark BSE index rose by 3.5 per cent and the value of shares traded was the highest since January at BD 15.8 million ($41.7 million). And those on the way up outnumbered those declining by 14 to 11. But the majority, 21 stocks, registered no change in value.

Nevertheless, there have been some interesting movements in recent months among the big and medium caps. The shares of Bahrain Telecommunications Company (Batelco) started rising in mid-April on the back of speculation that the team of Batelco and the UK's Cable & Wirelesswould win the second GSM licence in Oman. The share price reached a peak of BD 0.828 ($2.178) on 19 May, but had fallen back to BD 0.798 ($2.100) by 22 June following the news that the local operator had lost out to Qatar Telecomand Denmark's TDC. But in the domestic market Batelco is proving resilient in the face of competition.

The insurance sector saw the highest volume of shares traded in May and the star performer was Arab Insurance Group (Arig). The group's share price shot up by 34 per cent over the course of the month as Arig reported first-quarter profits and continued the divestment of non-core subsidiaries.

Of the medium caps, the performance of logistics company Bahrain Maritime & Mercantile International stands out. The share price has risen substantially, hitting a high of BD 1.015 ($2.671) since the company announced first-quarter net income of BD 2.3 million ($6.1 million). New foodstuff distribution contracts in the local market and military supply contracts at home and abroad, particularly in Afghanistan, have boosted income and increased investor confidence.

Banking stocks generally moved little in May. Even shares in Ahli United Bank (AUB)were stable, in spite of the news that shareholders at Ahli Bank of Qatarhad agreed to the sale of a 40 per cent stake and rumours of a plan to acquire part of Sharjah-based United Arab Bank. Contrasting in fortunes, the troubled BMB Investment Bankrequested a suspension of trading in its shares on 1 June, pending completion of a long-awaited refinancing.

Looking forward, brokers say Bahrain Commercial Facilities Companyis a stock to watch. It has been underperforming over the past quarter and its shares could move as activities are expanded to include financing of the blossoming real estate sector.

'The Bahraini bourse is doomed to be compared unfavourably with booming neighbouring markets, even though shares on the BSE are generally good value,' says Mohammed Adnan Afzal, equities analyst at the local Securities & Investment Commission (Sico). 'And with summer coming, we are likely to see trading slowing down further.'