Interesting comment by S&P Fund Services lead analyst Alison Cratchley, made to Business Intelligence Middle-East, on the possibility of an impending correction across MENA markets:

“Relative to other emerging markets, the MENA region significantly underperformed (12.7% rise compared with 37.8%) in the six months to the end of June 2009. This probably reflects investors’ perception that the MENA region is highly leveraged to a U.S. recovery due to its dependence on oil revenues, whereas other emerging markets are supported by robust domestic demand.”

Several fund managers quoted, including Shakeel Sarwar, Head of Asset Management at the Manama (Bahrain)-based SICO, an investment bank, as well as Mashreq Bank’s Ibrahim Masood, concurred with this cautious sentiment, citing the region’s potentially unsustainable rally to date, low liquidity levels, as well as its perceived correlation with U.S. equity markets, which are considered equally overbought by many estimates. Last Friday, for example, the equity-only put/call ratio saw its most-stretched level since December 20, 2007, with more than twice as many call options being traded as put options–a possible sign of institutions’ collective desire to reduce risk.