Stock markets in the Middle East have missed out this year on a boom in "frontier markets", although the region's bourses are tipped to improve as economies such as China and India start to slow.
Frontier markets are countries, as diverse as Senegal, Pakistan and Croatia, where instability creates high levels of risk but offers the potential for large returns.
A study for Russell Investments, a global investment management company, reveals that its index of 41 frontier markets has increased 21.6 per cent so far this year.
MSCI Barra's index of frontier markets is up 14.7 per cent this year, while the S&P Frontier BMI index is up 14.3 per cent.
However, stock markets in Bahrain, Kuwait, Jordan and Lebanon have declined over the past 11 months, according to data from Bloomberg.
Qatar and Tunisia are the only frontier markets to show an overall advance this year, rising 16.5 per cent and 23.1 per cent, respectively.
"The MENA markets have been one of the laggard markets for this year as a whole," said Mark McFarland, an economist at Emirates NBD. This made local stocks "among the cheapest markets in the world" on a price-to-earnings basis, he said.
While the UAE is variously considered an emerging market and a frontier market by different indexes, local stock markets have also underperformed this year, with the Dubai Financial Market General Index falling 7.9 per cent and the Abu Dhabi Securities Exchange General Index up 0.2 per cent.
One factor limiting stock market growth was a dearth of initial public offerings (IPOs), Mr McFarland said.
Referring to the IPO activity in the Gulf, such as flotations by Axiom Telecom next week and Nawras last month, he said: "These are the kind of things you want to see happening here to get things going."
He also drew comparisons with China's growing number of IPOs, which contributed to explosive growth in that country's markets.
"China, in 2003, was the [laggard] of emerging markets. What happened after this was a feedback loop. Companies decided that they wanted to list as market appetite improved."
One Gulf-based asset manager, who asked not to be named, agreed that the increase in Gulf listings would help markets but said the scale of the impact would depend on the companies attempting to list.
"I think it may be a catalyst for the region, but you'd need more IPOs and interesting IPOs," he said, suggesting that the listing of a government-related entity could be a catalyst.
"To attract big investments from international investors, you need to sell fancy things," he said.