Interest in the dual listings of Kuwaiti companies International Investment Group, Al-Madina Finance & Investment Company and Gulf Petroleum Investment was muted and did little to stir flagging volumes. They bring the number of listed companies to 55. 'The listings were supposed to produce more activity but that has not happened,' says Sherif Abdul Khalek, dealing room manager at Al-Futtaim

HC Securities.

Analysts attribute the lacklustre volumes to investors being on holiday and the withdrawal of foreign funds. International hedge funds that entered the market in April attracted by valuations, volatility and the market's lack of correlation with the global capital markets have since been booking profits.

'They are starting to take positions again but they are not buying aggressively,' says Abdul Khalek. 'They are waiting to see bigger volumes.'

They might have to wait some time. The market has been in a consolidation phase since the beginning of the year, rising by only 3 per cent since 1 January. It is down 50 per cent since its peak in November 2005. Average daily volumes on the bourse in mid-September were AED 600 million-800 million ($163 million-218 million).

In contrast to the market's flat trading, blue chip Emaar Properties has had a rough ride in recent weeks. It has faced a series of obstacles in the past month. The stock has recovered from its 23 August share price low of AED 9.20 ($2.50) and closed trading at AED 10.72 ($2.90) on 12 September despite an ongoing law suit with Jadawel International, a partner in Saudi Arabia.

Of more interest is the cancellation of the company's land-for-shares deal with Dubai Holding in late August. The announcement resolved continuing uncertainty about the swap but annoyed investors, who had been waiting since March for the details of the transaction.

Merger hopes

The DFM has the lowest prices of any exchange in the GCC and Emaar stock has a price/earnings (PE) ratio of about 10, below the market average of 11.9. However, interest in the stock is subdued. 'High net-worth individuals and institutions already have positions and people are not keen to buy more,' says Abdul Khalek.

Analysts are pinning their hopes on the merger of Emirates Bank International and National Bank of Dubai to encourage more trading. The merged entity will list on the DFM on 14 October. 'I expect the new company to be more liquid and attract more investors,' says Reda Gomaa, UAE fund manager

at Mashreqbank.