Stockbrokers are being inundated with inquiries from banks trying to sell them credit cards and loans as the recent rally in stocks bolsters confidence in the equities market.
It follows several years of some banks giving brokers a wide berth when selling their products, perceiving them as "high risk" during the global financial crisis.
"A guy like me would never get a call from a bank," said Sherif Abu Noor, a broker at Global for Shares and Bonds. "We were normally blacklisted because our industry had a lot of turnover and there was a very high risk of being fired. From my own experience, I have recently received cold calls from Mashreqbank and First Gulf Bank for credit cards and personal loans."
The calls are a recent phenomenon, occurring over the past two months, he said. The turnaround reflects a return of positive sentiment towards equities after an almost 20 per cent rally in the Dubai benchmark index since the start of the year. The Abu Dhabi index has advanced more than 15 per cent in the same period.
Brokerages, whose bread and butter income is from trading commissions, have benefited from a significant rise in market activity. Traded value on the Dubai Financial Market surged to a peak of Dh672 million (US$182.9m) on January 10. That compares with a daily average trade of Dh218m for the past 12 months. The figures are still down from the peak of Dh2.95 billion traded on June 1, 2009.
Tumbling volumes forced 23 brokerages to shut down last year. Many of the independent securities companies have had their capital replenished and maintained the bare minimum as required by the market regulator: a trading manager and two brokers.
There are 50 brokerages in operation from a peak of 103 more than two years ago. During the depths of the financial crisis, Khaldoun Jaradat, the trading manager at Brokerage House Securities, was refused when he visited banks to apply for a loan to buy a car.
"Now those same banks are calling and offering personal loans," he said. "They offered credit cards and easy cash and easy loans for one year or six months. They also offered a credit card free of charge."
Banks have even visited his company's offices to try to sell products to him and his fellow brokers.
Mr Jaradat believes the influx of inquiries has been accentuated by the downsizing of the industry, leaving lenders with fewer brokers to target.
However, global events in recent days have exposed the fragility of the improving outlook. First came the inconclusive result of the Italian elections last week, which injected fresh uncertainty into the euro-zone crisis. Then came the United States president Barack Obama on Friday signing into effect a wave of hefty spending cuts which, he has warned, could undermine the country's economy.