But for all the violent fluctuations, the story is in the trading volumes. In its first week of trading, 200 million of the 417 million shares had been turned over - on 30 March alone, AED 76 million ($21 million) worth of trade in Amlak was reported.

'The UAE market is extremely liquid and this is only going to drive prices up,' says Haissam Arabi of Shuaa Capital. 'The Amlak experience has effectively opened the door for what could be a string of other IPOs. This is not a very transparent market but maybe four-eight could be staged in Dubai and Abu Dhabi before the end of the year. They are likely to receive a warm reception from investors given their current mood.'

Tamweel, the Dubai-based provider of Islamically-structured home finance, is expected to be the next company to come to market. Other potential offerings could come from a Dubai-based construction company and the spinning off of divisions by Al-Habtoor Groupand Al-Futtaim Group. Further ahead, the Dubai government is thought to be carefully moving forward with plans for the part-privatisation of corporate giants such as Emiratesand Dubai Aluminium, though these entities are likely to be listed on the proposed Dubai International Financial Exchange.

'The secondary market is likely to see further appreciation over the coming months,' says Arabi. 'Strong corporate profits can sustain the current high valuations and with the prevailing low interest rates, the strong dividend payouts are just going to get ploughed back into the market.'

The Dubai and Abu Dhabi markets are currently trading on about 17 times 2003 earnings - not far off historic highs - but the dangers of a correction are mitigated by the anticipated 20 per cent average profit growth in 2004, which would put it on about 14 times forward earnings. With the market yielding around 4 per cent, investors are likely to keep faith.

Stock picking in a broad and sustained bull run is a complex process. 'In the banking sector we like Union National Bank- its stock has underperformed its peers despite a 20 per cent lift in profits,' says Arabi. ' Abu Dhabi Commercial Bankis an interesting turnaround play. There is new management coming in and restructuring under way. And Emaar Propertiesis also looking attractive for both financial and structural reasons.'

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