GCC markets saw gains in February, with a high of 14% in Kuwait’s Weighted Index on account of trading up in Blue Chips like Zain and NIG says the recent report published by Kuwait Financial Center “Markaz”.. In Kuwait, the story revolved around the USD 9 bn sale of Zain’s African assets to India’s Bharti Airtel which pushed up trading in the stock as well as other Kuwait Blue Chips like NBK, KFH and NIG. In the UAE, the Dubai World debt restructuring process continued to dominate headlines although investors have calmed somewhat in their responses to news concerning the debt plan. MSCI GCC total return index posted a monthly gain of 4.77% in February, bringing the YTD gain to 6%.
Volume traded in the GCC was down 19% in February while Value Traded contracted 12% to USD 23.6 bn. Kuwait’s value traded expanded 37% to USD 5.75 bn. Overall volatility in the GCC was flat as per the Markaz Volatility Index; the UAE, Saudi Arabia and Qatar saw their volatility decline by 25% to 40% in February.

Global Markets review
Global markets showed mild returns as sovereign debt woes in Greece took center stage. MSCI World gained 1% in February following a 4% loss in January, bringing the YTD loss to 3%. On a market cap weighted basis, MSCI UK contributed 0.5% to the loss while MSCI France, MSCI Germany and MSCI Spain contributed losses of 0.4% each.   
Global investors turned their eyes to Greece as the European Union grappled with the possibility of its first ever sovereign bailout. Concerns about Greece’s ability to finance its significant fiscal deficit came to a head in late-January, resulting in the Greek-German spread (which measures the premium that investors demand when buying Greek debt over German bonds) spiking 396 basis points, the highest level since the euro’s inception. European Union members have demanded fiscal austerity from Greece in exchange for a possible USD 34 bn bailout. As a result, the Greek government has spent the last two months slashing its fiscal budget deficit by up to USD 6.6 bn by hiking sales taxes and cutting wages and bonus payments. These measures, coupled with firm statements of support by EU members, have allayed investor concerns somewhat; despite Greek Prime Minister, George Papandreou, tossing around words such as “catastrophe” and budget “landmines”.
Economic recovery seems to be strengthening sequentially, with analyst consensus being that the recession ended in June of last year. The US inflation rate is at 2.6%, which is below average for this stage of recovery. The consensus seems to be that the US will go through a “W” shaped recovery, which should keep inflationary fears at bay. US real GDP grew at a 5.9% annual rate in 4Q09 boosted by slower inventory liquidation. However, economists have been quick to point out that inventory-led GDP growth is a “cyclical phenomenon” which normally follows an economic downturn and is therefore unsustainable, leading to slightly slower growth figures expected in the coming quarter.