The star performer in recent weeks has been Emirates Telecommunications Corporation (Etisalat)- unsurprisingly in light of the news that the operator is in pole position for the region's most lucrative telecoms market opening. Etisalat was announced as the highest bidder for a second mobile licence in Saudi Arabia in mid-July. 'Etisalat shares have put on 25 per cent since the disclosure, as people reckon it's a formality that it will land the licence,' says Walid Shihabi, head of research at the local Shuaa Capital. 'And it hasn't overpaid given the magnitude of the opportunity offered by the Saudi market. Gulf operators also have a low opportunity cost in bidding for such licences as they have huge cash piles and very low debt levels.'

Another stock that has caught the eye is Dubai Islamic Bank (DIB), which was among May's top gainers on the back of news that capital was to be increased by 50 per cent, and has continued the upward trend, in spite of the unprecedented move by the Dubai Financial Market to cancel some trades amid accusations of insider trading. Investors have no doubt been encouraged by the scale of the financing mandates descending on the bank over the past month. As if being asked to arrange the Gulf's biggest-ever issue - at $750 million, for Dubai's Department of Civil Aviation - of the Islamic leasing sukuk instrument was not enough, mid-July saw Dubai-based property developer Nakheel charge DIB with arranging a $350 million Islamically-structured loan facility.

'Another reason behind recent rises on the indexes is that certain laggards have begun to catch up, notably Tabreed [National Central Cooling Company]and Oasis [International Leasing Company],' says Shihabi. 'They were trading below par, for no particular reason, but investors have become re-enamoured as they rotate funds into some of the smaller stocks.'

The link between the bourses' ascent and the UAE's construction boom remains tight. Dubai-based Emaar Propertiesroutinely accounts for the highest monthly trading value. The shares of Union Cement Companyand Gulf Cement Company, both based in Ras al-Khaimah, registered falls of close to 20 per cent in June. But the correction needs to be viewed in the context of gains of close to 200 per cent the previous month, as cement prices continued to rise through the roof and as both companies gear up for major capacity expansions.

Looking forward, investors are eagerly anticipating a number of relatively small IPOs due to come to market by the end of the year. However, the offerings appear unlikely to make a significant dent in the plentiful liquidity fuelling the stock market boom.