The mild reaction of Middle East stock markets to a plunge on Wall Street on 27 October shows that links between the region's bourses and the rest of the world are still weak, analysts say.

Falls on several Arab markets and in Turkey, blamed by brokers on the global crisis, appear to have as much to do with local factors.

A stock market crash in Hong Kong triggered a 7 per cent fall in New York on 27 October and sharp declines in other world markets in what many feared was a rerun of the crash of 1987. Wall Street regained much of the lost ground the next day, though the worldwide outlook was still uncertain as MEED went to press. Most Middle East stock markets fell on 27 and 28 October, but only the Turkish stock market saw prices decline significantly.

Turkey's stock market, which has risen by nearly 85 per cent in the last two months, fell back by just under 20 per cent on 27 and

28 October. Brokers said there had been some selling by foreign investors, but the correction was also due to profit-taking before a national holiday.

They expect investors to return because the outlook for Turkey's economy compares well to East Asia.

Egypt, the only Arab stock market with significant amounts of foreign investment, is linked to global market trends through the five local companies with global depositary receipts (GDRs) listed in London. Although the prices of the GDRs fell by an average of about 10 per cent at the start of the week, the local market was only around 2 per cent lower, implying that the GDR link is not enough on its own to create dramatic movements in Cairo.

'It's obvious that it's not really connected [to events around the world],' says Suha Najjar, equity analyst at Nomura International in London. She says the main factor behind the fall was selling by retail investors seeking funds to invest in new privatisations, adding that the sale of GDRs in London was by traders rather than long-term investors.

The Moroccan, Tunisian and Jordanian bourses were little affected by world events on 27 and 28 October. Share prices fell by

3 per cent in Bahrain, where some of the most active stocks are offshore investment banks with exposure to Western markets. Prices fell by about 2 per cent in Kuwait and just over 1 per cent in Oman. All three markets have touched record highs in recent months and local investors appear to have used world events as an excuse for profit-taking.

'Some correction has been expected in Kuwait. It was waiting for a reason to happen and it just happened a little earlier than we expected,' says Gerard Snabien, senior analyst at Kuwait's Al-Shall economic consultants.