Stock Market Developments in the Countries of the Gulf Cooperation Council

Powered by the region's massive oil earnings, Gulf Cooperation Council (GCC) economies grew dramatically, with positive fiscal and external current account positions, and rapidly expanding banking systems. The GCC corporate sector had explosive profitability and earnings growth relative to its global peers, supported by expansionary fiscal spending and massive investment programs throughout the region. These conditions, coupled with rosy economic prospects, fueled the unprecedented boom in most GCC equity markets beginning in 2003. The GCC markets surpassed the gains in stock price indices recorded during the NASDAQ dot.com bubble and the Japanese asset price bubble of the late 1980s. However, despite the strong fundamentals, most characteristics of a stock market bubble were also observed during the GCC boom.