Emaar slumped to its lowest close since April 2005 to send the Dubai bourse down for the seventh session running, while six other stocks hit 52-week lows.

The Dubai Financial Market fell another 1.98 per cent to 4,944 points to take its losses this month to 8.5 per cent. Emaar was the headline loser, slipping 3.03 per cent to Dh9.60, amid further panic selling of almost all stocks as losers outnumbered gainers 23:2.

"Emaar fell to a 12-month intraday low of Dh9.58 and so this may signal the bottom of the market is near," said Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research.

"When Emaar reached a 12-month peak of Dh15.70 in January, many people said this marked the end of the market's bull run and they were proved largely right and so yesterday's low could indicate the end of the slump."

Shiv Prakash, Mac Sharaf Securities technical analyst, offers a more pessimistic outlook, saying Emaar fell through a significant support at Dh9.70 and could fall to its next major prop at Dh8.89. If such a decline were to happen the DFM would fall to between 4,600 and 4,800 points, he warned.

Besides Emaar, Aramex, Dubai Investments, Dubai Islamic Bank, Tabreed, National Cement and Islamic Arab Insurance all fell to new 12-month lows.

DIB dropped 1.44 per cent to Dh7.49, while Dubai Investments and Aramex fell 1.39 and 2.23 per cent respectively.

"I think we have all been surprised and disappointed by the market," said Manibhandu.

"Investors on the UAE exchanges tend to rely heavily on technical analysis and the latest falls have shifted the goalposts. Whereas before they were saying that 4,900 would be a good place to buy they are now looking at between 4,700 and 4,800 points instead.

"There will be some investors who were hoping this decline would happen and they will be the first to buy because they sold early."

DFM Company increased for only the second time in eight sessions to climb 0.26 per cent to Dh3.88, although it remains down 16 per cent this month.

Turnover fell by a sixth from the day before to Dh820 million, which may offer some hope that selling may be slowing down.

Air Arabia was the most active stock, claiming 31 million of the 178 million shares that changed hands yesterday, but it fell to Dh1.51, its worst finish since October last year. Emaar saw Dh229m of shares traded, while Arabtec was second with Dh155m as it declined 2.23 per cent.


Dollar to the rescue?

While the UAE markets have been blighted by events outside its borders, most notably Iran's nuclear stand off, the solution to their woes could also come from abroad.

The US dollar is resurgent and hit a six-month high against a basket of currencies yesterday, having gained 4.8 per cent against the sterling and 6.3 per cent against the euro over the past month and currency specialists predict the greenback will steepen its ascent. With the dirham pegged to the dollar, this will mean a stronger UAE currency.

"Foreign funds like to invest in markets with a strong currency because it offers the hope of a double gain through a rise in equity prices and the value of the local currency," said Sanyalaksna Manibhandu.


Advantage long-term investors

From a technical perspective, the DFM will find strong support at 4,645 points. This is a 61 per cent Fibonacci retracement of its rally from 3,632 to 6,318 points in late 2007 and early 2008. A minor prop can also be found at 4,800 points.

"Long-term investors can take advantage of the slump to buy at cheap prices because the overall long-term story is bullish even if the market is bearish right now," said Shiv Prakash, Mac Sharaf Securities technical analyst.

He believes the Dubai bourse is unlikely to move much above 5,000 points before the end of 2008.

"After Ramadan we will discover whether the market can recover and to what extent foreign funds will re-enter," said Prakash.

Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research, believes any rally will be led by both local and foreign funds, but warns a recovery is unlikely until September.

"If last year's pattern is followed then we could see a reasonably good rally in October and November," added Manibhandu.

"Smart money will look to buy before the end of August. It's probably wise to accumulate at 4,900 and 4,800 points because if you try to guess the bottom of the market it will move back up before you realise.

"People think that 4,750 could be the low, but then again people were saying the same thing at 5,200. The stock market is a dynamic process and so investors should look at the factors influencing it on a daily basis, but 4,750 should be the bottom."