As Saudi Arabian stocks soared to new highs in April, speculation mounted that the government would finally throw the doors open to foreign capital.
As quickly as the rally surged, however, it faltered.
This month, the Tadawul All-Share Index, long the darling of the Middle East's equity market landscape, hovers around the upper-6,000s mark, with the 7,930.58 high recorded on April 3 a distant memory. There is yet to be any solid news on a policy change over stock-exchange reform. The bulls - who in the spring were hinting the Tadawul could hit 10,000 - could well have bucked too soon.
"We thought that the rally was unsustainable," says Said Hirsh, an analyst at Capital Economics in London. "It was fuelled by speculation on the part of individual investors, and with geopolitical risks in the region still high and oil prices likely to fall this year, Saudi stocks could quickly lose their appeal."
Oil prices are key, says Mr Hirsh, in light of the weighting of the petrochemicals sector on the Saudi exchange where it accounts for some 40 per cent. Saudi Basic Industries Corporation (Sabic) alone accounts for 11 per cent.
Capital Economics estimates oil prices will drop to below US$85 a barrel by 2014, hitting Saudi company earnings.
Meanwhile, Saudi banks, the second-biggest weighting on the exchange (30 per cent) are heavily linked to government and consumer spending, which is also reliant on oil prices, Mr Hirsh says.
Hopes of the Saudi market opening to foreign investors this year, he adds, are fading fast, paving the way for more volatility as retail investors - which account for about 90 per cent of trades on the Tadawul - respond.
But not all analysts are so pessimistic. Saud Masud, the chief executive at SM Advisory Group,says that while oil price fluctuations and their effects on some sectors may be near-term headwinds, "I believe there is more upside potential."
Peter Gotke, the vice president at BNY Mellon, also urges perspective. While the spring rally has faded, he says, the Saudi exchange is still performing well in comparison to other Arabian Gulf and global markets.
"Tadawul is up over 6 per cent thus far this year - relative to global bourses, this is strong, and relative to most regional exchanges [bar Egypt and Dubai] this is strong. There may well be a pause but this is not unusual over the summer and Ramadan months," he says.
Meanwhile, Sleiman Aboulhosn, the vice president and assistant fund manager at Al Masah Capital, disputes that a fall in oil prices - even as low as Capital Economic's estimates - will have an adverse effect on either company results or the wider Saudi economy. The annual budget, he points out, assumes an average oil price of US$85 a barrel, significantly lower than the $100 a barrel expected for the year ahead.
"I believe the government's spending plans will remain intact and may, in fact, be revised upward in case oil prices recover. This means that the real economy will continue to benefit from government expenditure, banks will continue to grow their books - both loans and deposits - and consumer stocks will continue to benefit as the oil wealth is spread around," Mr Aboulhosn says.
Moreover, companiessuch as Sabic - and its subsidiaries including the ethylene producer Yansab - are reporting robust demand from emerging economies such as China, says Mr Aboulhosn.
If that demand remains strong, the Saudi market will be a direct beneficiary.
"The petrochemicals sector buys its feedstock at a deep discount compared to international prices, which translates in wide margins in the sector. This sector will make money even if oil prices go to $50," says Sebastien Henin, an analyst at TNI in Abu Dhabi.
But Capital Economics' Mr Hirsh remains bearish. There is too much downside risk for the Saudi market to recreate its spring rally, and with foreign investment regulation unlikely to be liberalised any time soon, there is not a lot for Saudi investors to get excited about, he says.
"Saudi corporate earnings could be hit by a slowdown in global economic growth and demand. This will impact on export-orientated sectors such as petrochemicals more than others but, given their size on the index and importance for the economy as a whole, the overall performance of the stock market could suffer.
"The bigger picture is one of uncertainty, which will increase downside risks to the stock market," he adds.