Demonstrations in Bahrain sent the country's markets heading downwards in early trading, but stocks there closed yesterday in better shape than in any other Gulf market.
Bahrain's All Share Index closed down 0.24 per cent at 1,466.66 but its neighbours saw sharper declines.
The Abu Dhabi Securities Exchange General Index closed down 1.2 per cent at 2,683.97, while the Dubai Financial Market lost 1.3 per cent to 1,594.87. Fadi al Said, a fund manager at ING, said the reason was the lack of institutional investments in the Bahrain bourse.
Investors pulling back in the Middle East were mainly leaving other more heavily traded markets such as Qatar and the UAE.
"Bahrain is a very closely held market, even on the retail side," said Mr al Said. "If you look at the institutional investors there are very few of them who have any exposure to Bahrain."
The indiscriminate flight from the region by some investors is leaving rich pickings in other Gulf markets less vulnerable to political unrest, Mr al Said added. "There's a lot of opportunities that might be created by this kind of sell-off."
But worries over the UAE's property sector also weighed on markets, with Union Properties declining 6.9 per cent to 33.5 fils after reporting a loss of Dh1.5 billion for last year, tripling its loss of a year earlier.
"It is hard for us to see Union Properties's prospects improving over the short term unless significant asset sales can be consummated in 2011," said Chet Riley, an analyst at Nomura in Dubai. Elsewhere yesterday, Kuwait declined 1.38 per cent to 6,559.50 and Qatar's bourse shed 1.78 per cent to 8,821.07. Oman's index was down 0.3 per cent to 6,971.58. The Saudi Tadawul All-Share Index saw the biggest losses in the region, falling 1.8 per cent to 6,486.83. Most Gulf markets will be closed for a public holiday today.