Turnover in six Arab stock markets open to foreign investors will almost double in 1995, according to a new report on Middle East equities by Blakeney Management of the UK.

The report says Middle East economies are improving. 'Next year could be the year when the stock markets start to reflect that improvement,' it says. 'We can think of no other region where the supply and demand fundamentals are so favourable for equities.'

The report forecasts that Morocco will be the busiest market in 1995 with turnover of $1,300 million compared with the $850 million it estimates for 1994. The biggest increase will be in Egypt which is forecast to have turnover of $1,200 million, more than twice the figure estimated in 1994 (MEED 28:10:94, Cover Story). Turnover in the six markets is forecast to hit $5,350 million in 1995 compared with $2,540 million in 1993.

The report says Egypt is a particularly bright prospect. 'There is a 20 per cent chance of a revolution and losing all your money, and an 80 per cent chance of doubling it by Easter,' it says. 'We like those odds. Egypt now reminds us of India in early 1992.'

The report says the Egyptian market is affected by a shortage of stock. 'The only real potential source of supply are the four big government- owned banks which have massive portfolios of stock in their vaults,' it says. 'Over time, they will be selling these off. The only way to access these portfolios at present is by subscribing to one of the five new mutual funds.'

The report says that Oman is the cheapest market in the world outside sub-Saharan Africa. 'At 10 times earnings, it is selling at a 58 per cent discount to the IFC (International Finance Corporation) multiple,' it says. 'This is despite no inflation and healthy profit growth. At this level, with the country emerging from a recessionary period, it is good value.'

See pages 40-42 for a round-up of developments in 11 Middle East stock markets