The Gulf Cooperation Council (GCC) markets had a positive month; the S&P GCC Composite was up 2.55% due to strong performance from Saudi Arabia and Qatar, which gained 5.13% and 2.17% respectively, for the month, Kuwait Financial Centre ‘Markaz' said in a statement. The largest decline was in Dubai, down 1.85% in December. For the year, the S&P GCC fell 8.5% as all markets ended in the red, except Qatar which managed a modest gain of 1%. Double-digit declines were seen everywhere except Saudi Arabia which limited its loss to 3%. The biggest loser was Bahrain, where political turmoil led to a 20% decline on the index. MSCI kept Qatar and the UAE listed as frontier markets citing low liquidity and foreign investor limits in Qatar. However, both countries are on the list for a mid-year review for possible upgrades to emerging market status. The Saudi exchange is aiming to finalize rules concerning foreign investors on the Tadawul by mid-January, with a goal to implement the rules by 1Q or 2Q 2012. UAE bank deposits fell for the fifth consecutive month in November, pushing interbank rates up and squeezing bank margins. The Kuwait government budget surplus reached USD41.6bn for the first eight months of the year (to November). Revenues were up 41.6% to USD 67bn. The Qatar Financial Markets Authority has adopted new rules concerning listing and IPO activities on the secondary market in order to further consolidate activities within the market and regulate the various parties. The new rules will also encourage small-medium enterprises (SMEs) to list. Liquidity was up, with value and volume traded expanding 47% and 62%, respectively, for December. For 2011, value traded in the GCC came to USD354bn, a 19% increase and the first year of liquidity expansion since 2006. Saudi and Qatar were the only markets that saw positive liquidity growth though, logging increases of 44% and 22%, respectively, with Qatar usurping the position of second most liquid market in the GCC. Kuwait saw its liquidity decline by 50% to USD 22bn. Risk in the GCC (as measured by the Markaz Volatility Index – MVX) declined 34% in December, with a 2011 annual expansion of 16%. Abu Dhabi saw its December MVX nearly double while MVX Kuwait was 16% for the month, but 34% for the year. Global Markets review monthly returns were mainly negative, except for a roughly 1% gain in both FTSE and S&P 500. Nikkei 225 saw a monthly decline of 6.2% followed by Shanghai, which was down 5.7%. Monthly ReturnsWorld markets ended the year on a tenuous note, with most markets logging a negative month, as many variables remain unaddressed going into the new year.