There are few indications that the bulls are running out of steam. By regional standards, the KSE's stock valuations still seem modest, with an average price/earnings (PE) ratio of about 12. And while other Gulf bourses seem in danger of overheating, the Kuwait exchange has continued room to grow. 'The market cannot overheat if it is not even hot,' says Shailesh Dash, head of research at the local Global Investment House. 'We've revised our market projections upwards, and now expect to see the KSE hit the 13,000-point mark by the end of the year.'

Half-year profit figures are still driving the market, having increased by an average of 82 per cent year on year, and at a rate more than 20 per cent higher than market valuations, resulting in an average PE ratio that is actually lower than it was earlier in the year.

The market has also been buoyed by the rising oil price. The majority of listed firms are heavily reliant on government business, and with state coffers overflowing capital expenditure is expected to rocket, guaranteeing plenty of work for all.

The banking sector remains one of the principal drivers, with the likes of Global, National Bank of Kuwait and Burgan Bankleading the way. 'Banking stocks were for a long time undervalued, as investors sought other stocks which were perceived to have more upside potential such as telecoms,' says Dash. 'But in recent months, that's changed as investors look for what they consider safer stocks.'

The switch was hastened by concerns over the recent rights issue by Mobile Telecommunications Company (MTC)and its $3,400 million cash purchase of Amsterdam-based CelTel. MTC stock fell by almost KD 1 ($3.45) to KD 4.80 ($16.60) between August and September as investors feared that the company had overextended itself. By early October, MTC had recovered to KD 5 ($17.20), still up by more than 30 per cent year to date.

The only sector not to have benefited from the boom has been insurance. Like banking, it has lagged behind other stocks, experiencing PE ratios of seven to eight. 'Insurance is undervalued,' says Dash. 'And it will look increasingly attractive.'

The future is bright, with analysts confident that almost every stock will do well. 'You can't go wrong with picking a stock,' says Dash. 'The way the market is going, very few are likely to lose out.'

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