A tip for DFM's Arabtec sleuths: follow the volume

If there is a large number of shares traded ahead of a deal, it is a more accurate indicator of something dodgy than a price rise.

The DFM is reviewing activity in Arabtec's shares to look for patterns indicating insider dealing.

Share-trading analysis is a complex thing. The London Stock Exchange used to publish a monthly record of share dealings called the Official Gazette (though I'm sure it's all available online now) over which I spent many hours of tedious labour trying to identify suspect share deals in quoted companies. The OG was like a huge telephone directory, but without the names. Just column after column of numbers, giving dates, times, amounts and prices but no clue as to the identity of traders. In order to protect market confidentiality, trader IDs were all coded, and only the LSE had the code. This financial Enigma machine would have enabled me to crack some of the biggest insider-dealing stories of the 1980s and 1990s, but I never managed to obtain it.

But all the hours spent sifting OG statistics taught me one valuable thing: follow the volume. An obvious sign of a suspicious share transaction is a sharp rise in price ahead of the deal, but if there is also a large number of shares traded, it is a more accurate indicator of something dodgy. Insider dealing, by its nature, is a conspiratorial affair, involving groups of people rather than individuals. Their combined deals will usually show up as a spike in the volume figures.

Dubai Financial Market (DFM) analysts currently "reviewing" dealings in Arabtec in the run-up to its US$1.7 billion (Dh6.24bn) takeover by Aabar should remember this as they pore over the spreadsheets. While most of the commentary has centred on the 33 per cent jump in Arabtec shares in the two weeks before the deal was announced on January 7, volume analysis shows a much more interesting situation a little earlier. On December 10, some 178 million Arabtec shares were traded as the share price began the steep rise that culminated in the Aabar deal.

Even for a well-traded stock like Arabtec, this is a huge number, more than three times the average daily volume for the year. A couple of days later, the Dubai property and construction sector received a boost when the merger between Emaar and Dubai Holding was shelved, but the significant jump in Arabtec price and volume happened before that. Other volume spikes occurred later on. On December 29, some 119 million shares were traded. On January 10, the figure reached 124 million, although given the slump the stock has suffered since the Aabar deal was announced, most of those must have been sellers. So the significant date remains December 10. My advice to the DFM's number crunchers is to find out who were the shrewd market operators who bought Arabtec that day.

Is the curse of Dubai PR about to strike again? The announcement last week of a new set-up at the top echelons of the emirate's spin-doctoring apparatus suggested things were going to quieten down for a while. Ahmed al Sheikh, the head of Dubai Media and trusted adviser to the Ruler, seemed to have consolidated his grip of the media, public relations and brand-building empire with the talented Giselle Pettyfer of Falcon and Associates at his right hand.

It seemed a good idea, after all the comings and goings of last year, to get the message straight and told by one mouthpiece. Readers will recall how Finsbury, the London PR firm, was hired and then fired by the Government, to be replaced by Brunswick, another UK firm headed by Alan Parker. After the flood of negative publicity that followed Dubai World's announcement on November 25 that it was seeking to restructure billions of dollars of debt, for which Brunswick's Dubai executives unfairly carried the can, Mr Parker had to fly in for emergency talks to save the account. He placated Dubai by putting up Jim Wilkinson, former adviser to US Treasury Secretary Hank Paulson, as his head of Dubai operations. All seemed well.

Now it appears Brunswick faces a challenge from outside. Bell Pottinger, the London firm run by the vastly experienced Tim Bell, is apparently sniffing round the Dubai account. Lord Bell already has a long-standing relationship with Emirates Airline and its chairman, the powerful Sheikh Ahmed bin Saeed Al Maktoum. "It seems to be all coming from Curzon Street [Bell's London HQ]," said one insider. "I know Tim wants to work for them."

In what capacity is a different matter. Apart from the Al Sheikh/Pettyfer axis, Brunswick advises the Dubai Department of Finance; Financial Dynamics, under the tireless John Hobday, has a full-time and demanding job with Dubai World; and several other westerners are pitching to Dubai entities, too. If Lord Bell elbows his way in to Dubai, it looks as though somebody will have to step aside. @Email:[e-mail]