clipped from www.ft.com

Mideast states urged to prop up stocks

Middle East governments and their sovereign wealth funds were yesterday urged to intervene in their domestic stock markets by a leading Gulf banker following sharp declines in the region’s equity markets.

There are fears that, despite the unprecedented oil boom, the Gulf could be heading towards a dramatic correction, similar to 2006 when hundreds of billions of dollars were wiped off the region’s equity markets. On Tuesday the Kuwait Investment Authority, Kuwait’s $200bn sovereign wealth fund, started buying into the country’s stock exchange, which was up about 20 per cent in the first half of the year, but has since fallen 21 per cent.

clipped from www.ft.com

Flight of foreign capital adds to woes

So much for decoupling. The MSCI Gulf index is down nearly a third this year, and paradoxically, the foreign capital that was supposed to decrease the volatility of regional equity markets has been blamed for much of the slump.