The Dubai Financial Market (DFM) has made a mockery of predictions that trading would be bleak during Ramadan by gaining 11.93 per cent since the start of the holy month of fasting.

Analysts had predicted slow trading during Ramadan as Muslims fasted and expatriates continued to take their summer holidays. Instead the market has comfortably exceeded the average price return recorded during the same period in 2008 and 2007 – and analysts say the DFM is poised for a post-Ramadan rally.

The average price return in the 17 sessions since August 23 stands at 9.79 per cent, compared with a negative 14.62 per cent in 2008 and 4.17 per cent in 2007.

The DFM general index added 11.93 per cent during the 17 sessions and closed yesterday at 2030.04 – a net rise of 216.34 points since the beginning of Ramadan. The main reason for the latest rally was the fact that stocks were underpriced, which attracted foreign investors.

Foreign investors were net buyers on the DFM during the past three weeks as their net investment in the market stood at Dh588.89 million, while Arabs and UAE/GCC nationals remained net sellers during the period.

The return of foreign investors, coupled with the re-entry of Arabs and UAE nationals after Eid Al Fitr, is likely to trigger a new rally on the bourse.

The pattern of Ramadan trading has been different from what was seen in previous years.

The Dubai stock exchange witnessed a rally in the stocks in 2007 and a fall in 2008, but interestingly trading volumes improved on both occasions.