No rally until mid-June

Investors hoping June will bring a stock market rally will have to wait until the middle of the month for any major movement, analysts say.

May was poor. The Abu Dhabi Securities Exchange added just under one per cent, but the Dubai Financial Market fell by 1.03 per cent to leave traders still waiting for the long-awaited index renaissance. "The current speculative activity means it's hard to call which way the ADX is heading," said Walid Shihabi, Shuaa Capital head of research.

"I would make more of a bet that the bigger stocks will make a move prior to the end of June and first half of 2008. There will probably be a mid-month rally in anticipation of the six-month results and ultimately prior to the expected summer slowdown."

Shihabi named Aldar and the Abu Dhabi's banking sector as the most likely sources for a June surge.

"May was disappointing in terms of index movement and was neutral overall – what moves our markets is news, be it positive or negative, and this was lacking," said Mohammed Ali Yasin, Emirates Securities managing director.

"But some stocks such as Arkan, Agthia and the Rak cement companies have made massive gains.

"In the absence of institutions, high net worth players have been able to move certain stocks, tempting other investors to jump on the bandwagon."

The much-delayed listing of Ajman Bank is expected to take place in June, which will boost liquidity and maybe bring other investors back to the market.

Shuaa's Shihabi said: "The DFM has been out of the limelight, but some of our preferred stocks seem to be picking up, such as Tamweel, and there's also reasonable activity in the real estate sector.

"The market in general is improving, but Dubai trading will be in the same range for the time being unless the ADX speculators look for new targets. However, the profile of DFM stocks are different, with some Abu Dhabi shares lending themselves better to speculative activity." Shihabi also highlighted the recent performance of some of Dubai's former favourites which have now hit a plateau.

"Air Arabia has stalled, with investors unwilling to push it up any further. Property stocks have been static for longer, but there now seems to be some upward momentum returning to this sector," said Shihabi. "Dubai is more likely than Abu Dhabi to pick up later this month," he added.

If the latter scenario occurs, then it would be a reversal of the trend in May, which saw Abu Dhabi dominate trading. Indeed, the capital's daily average turnover last month was Dh1.5 billion, compared to Dubai's Dh1.1bn. "June will be the same as May with no sudden movements, just some jerks in certain stocks," said Yasin.

All eyes will be on Arkan, undoubtedly the star stock of the past two months. The company posted record highs almost on a daily basis and will start today at a best ever Dh6.25, having gained 30 per cent in May.

Yasin added: "Arkan has broken and held above Dh6 and so I think the speculators will try to take it even higher. There's probably some profit taking already going on, but the high volumes are hiding it."

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