The Dubai Court of First Instance on 31 October sentenced the six - two nationals and four expatriates - for their roles in a late August attempt to manipulate the price of shares in Dubai Islamic Bank. Each were handed jail terms of three years and fined AED 1 million ($272 million), in addition to being ordered to pay collective compensation to the Securities & Commodities Authority. Although the attempted manipulation was almost too audacious to ignore - some $2,600 million-worth of shares changed hands over the course of a single day, the authorities' swift and harsh action was interpreted as a signal that as the market both booms and matures, policing is becoming stricter.

Further deepening of the market took place in September and October, when shares in Abu Dhabi National Energy Company (Taqa) and RAK Propertieswere listed on the Abu Dhabi Securities Market (ADSM). The listings coincided with the bourses reaching new heights, with the NBAD General Index closing at 18,800 points on 1 November and the Dubai Financial Market (DFM) Index ending the day at 1,236 points. 'The recent rally has been driven by Dana Gasreturning oversubscription money to investors from the recent IPO and by nine-month results, which were in some cases better than expected,' says Joe Kawkabani, fund manager at Shuaa Capital. 'Dubai [Financial Market] has been taking the lead, with the ADSM lagging somewhat.'

Among the blue chips, banking stocks have been doing well on the back of another round of reports of soaring profits. Emirates Telecommunications Corporation (Etisalat)announced in late October a 22 per cent year-on-year increase in revenues and the market reacted quite positively to news that the deal for the operator to acquire a 26 per cent stake in Pakistan Telecommunication Company was on the rocks. 'Investors had previously taken the view that Etisalat overpaid for the asset,' says Kawkabani.

Average forward price/earnings (PE) ratios are running at about 36. 'If looked at in the context of the rate of growth among listed companies, this doesn't appear too expensive, although by any other measure it is,' says Kawkabani. 'But there is a big question mark over whether such expansion can be repeated next year. Many companies are hitting their ceilings in terms of potential growth - cement firms for example.'

The IPO pipeline remains blocked since the bar imposed on share offerings of greenfield companies bythe Economy & Planning Ministry, pending changes to the laws governing them. Speculation is rife as to the likely shape of the new legislation. Some analysts suggest that a certain track record will be required before companies can go public and many expect that the much-maligned rule obliging shares to be offered at par will be scrapped. Across the board, the authorities appear determined to build a better-regulated market.

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