"Do you think MES (Gulf states) are a good proxy to be invested in the energy theme? It comprises a lot of banks & financial entities and maybe it could be a nice second derivative bet, through an enhanced middle class in those countries thanks to the oil boom. Thank you for your thoughts."

Eoin Treacy's view Thank you for this question which I'm sure will be of interest to other subscribers. I agree that Middle Eastern stock markets do not offer a pure play on energy prices. The investment decisions of their respective governments are probably of more importance.

A number of Middle Eastern markets hit accelerated peaks in 2005, well before oil peaked. This was at least in part because regional investors decided to invest at home rather than abroad due to a fear capital could be confiscated in a backlash to the 9/11 attacks. Oil revenues fuelled bubbles in domestic shares which popped when capital was reallocated abroad. During the 2007/08 oil bull market, Middle Eastern markets were a poor proxy and there is little reason to believe this has changed. The region's developing middle classes are a more likely potential theme for a future bull market and would probably be best bought when they next begin to show relative strength when compared to other regions.