Of course, the sharp upticks of a number of the region's benchmark indices can make for deceptive reading: as every stock speculator should know, it's not so much a question of what the market does, but when you enter and exit. For example, the strong surge in Kuwait may have seen indices appreciating by more than 25 per cent since the start of the year. But many long-haul investors remain deep in negative territory, with the market still having to gain another 40 per cent if it is to climb back to its historic highs of November 1997. For those more recent entrants into the Kuwaiti and other regional markets the pickings have been good in recent months and they might get better yet.

The recent surge on the disparate markets of the UAE has been the most spectacular and the most likely to continue deep into next year. The Abu Dhabi Financial Market, the substantial over-the-counter market, and the Dubai Financial Market have both moved off the historic lows of the summer, and deeper liquidity and firming sentiment suggest the bull could have some staying power. 'There is growth, there is value and the market is going to put on another 25 per cent in 2002,' says Walid Shihabi, the recently appointed senior financial analyst at Dubai-based Shuaa Capital. 'Trading volumes in Dubai are up 200 per cent on the summer and, despite the recent movements, there are still a lot of undervalued stocks. Corporate profits were strong last year and will be OK this year and this has yet to be factored into share prices.'

The bulls are also out and running in Kuwait. Traditionally a momentum-driven market, and probably the regional bourse that attracts the greatest amount of speculation, the strong showing this year will be luring in fresh money. 'There are still investors with burnt fingers, but memories are short here,' says a Kuwait-based broker. 'Moving markets suck capital in and, with forward ratios looking pretty, healthy prices are still on the way up. I'm forecasting that the market as a whole will rise 15 per cent next year, maybe more.'

The runes seem harder to read in Saudi Arabia, by far the largest market in the region. 'There are too many 'what ifs' to have a clear picture of the Saudi market,' says Shihabi. 'But with oil prices appearing to settle into what looks like a lower band and the non-oil economy looking fairly flat, it's hard to see the market finding much direction.' However, impetus could be added if moves to issue brokerage licences are made as expected; brokers want business and are likely to aggressively push money into the market.

The three smallest markets in the Gulf are likely to have mixed fortunes. After a prolonged period in the doldrums, the Bahrain Stock Exchange might be on the verge of a long-awaited recovery. With interest rates low and threatening to go lower, there is a case for thinking investors will be attracted back into one of the highest-yielding markets in the region: a number of Bahraini stocks pay dividends in excess of 8 per cent and the market as a whole yields almost 6 per cent. Add that to the as yet unrealised impact of two years of strong oil prices in Saudi Arabia filtering into the local economy and there could be some excitement. Few would dispute that the market is ripe for a recovery and that when it moves, it could move fast, maybe gaining 15-20 per cent next year. Of course, 2002 could just be another year spent waiting for the recovery to start.

In Qatar, much of the recovery has already been made, and the Doha Securities Market will be among the best global performers this year, having already appreciated by more than 30 per cent. The bulk of the gains have been driven by the belated surge of Qatar Telecom (Q-Tel) stock and a strong showing from Qatar National Bank (QNB), which between them account for the lion's share of the market. 'There is still a little upside on Q-Tel and QNB,' says Shihabi. 'And this will drive the market up another 5-10 per cent next year.'

The one blot on the landscape is the Muscat Securities Market (MSM), where bad news and bad sentiment have a habit of lingering. The benchmark index is languishing some 25 per cent down on the year and there are few signs of an imminent recovery. The full extent of the misery can be seen in the depth of the market's dive: the MSM index hit an all-time high of 509 on 3 February 1998 - in mid-December it was hovering around 150. With the entire market trading below book value, it is difficult to see it moving too much lower, but there is still a bad debt problem stifling positive sentiment.

Looking ahead to opportunities in 2002, regional investors will be assessing at a number of factors. Macroeconomic health, oil prices, corporate earnings and the potential repatriation of foreign investments are always to be taken into account. But to these considerations should be added the different characters of the regional markets. Unlike developed stock exchanges, none of the GCC bourses are lead indicators of economic trends. Most are reactive, with share price movements lagging behind events. There are two exceptions. Saudi Arabian equity movements have caught up to the extent that they are closer to being real-time responsive, and the Kuwaiti market has proved itself to be a largely dislocated momentum mover. For investors in the lagging markets, the challenge is to guess just how long the lag is.