Amid a lack of local catalysts heading into the traditionally quiet summer months, UAE equity markets have been left vulnerable to the economic uncertainty in the Eurozone. The Dubai Financial Market (DFM) General Index has lost more than 12 per cent since April 24 and the Abu Dhabi Securities Exchange (ADX) is down 1.5 per cent in the same period. The euro hit a fresh four-month low against the dollar yesterday amid fears debt-ravaged Greece could be forced to leave the single currency. As a result, nervous investors are removing their cash from risky equities and volumes have plunged in the UAE after a strong start to the year. \"I think the summer lull is already upon us; I see very few regional catalysts to a summer rally, but we do recognise that any significantly positive developments in the Eurozone will help slow down the UAE market\'s decline and possibly kick-start the next upward leg of the rally,\" said Sleiman Abu Al Hosn, assistant fund manager at Al Masah Capital. \"Besides that and with regards to liquidity, I think the economic recovery that is expected to continue in the UAE will contribute to a slow but steady hike in volumes in the long-term, and with the recovery, we should see local investor appetite pick up and drive IPO [initial public offering] activity, which will effectively boost trading volumes as well.\" The only remaining catalyst on the horizon is MSCI\'s decision on whether to upgrade the UAE and Qatar to emerging markets status. The index compiler added Dubai-builder Arabtec to its frontier markets gauge yesterday, just weeks before announcing the outcome of its latest classification review. Both countries have been denied an upgrade on numerous occasions in recent years and, in any instance, some analysts believe MSCI is not the answer to all their problems. \"The UAE\'s potential inclusion in the MSCI index could help on the volume side,\" said Sebastian Henin, portfolio manager at The National Investor in Abu Dhabi. \"But due to the expected size of the country in the MSCI emerging market index, it will not be a game changer. Foreign investors could easily ignore the market in their allocation. \"If you want to lure more investors and therefore more volume, you need to offer interesting investment stories. \"Look at what happened in Saudi Arabia during the first quarter, where volumes were back to 2008 levels. \"A cocktail of earnings growth, better visibility on the macro and micro side and appealing valuations have fuelled the movement. \"The UAE is not too far down the road. In Dubai, most sectors from hospitality to transport are performing extremely well. In Abu Dhabi, there is a strong commitment from the government to revive some major projects. \"At one point in time, this revival will give some comfort to retail investors to get back into the market.\" In the meantime, however, macro-economic complications in the Eurozone are dominating investor sentiment across global markets. Tokyo\'s Nikkei index closed down more than one per cent yesterday, while Hong Kong\'s Hang Seng and South Korea\'s Kospi lost about three per cent. Oil prices also tumbled. \"The Eurozone story probably contributed negatively to the market performance, as elsewhere in the world,\" Henin said. \"But it is more sentiment driven and the impact of the ongoing European crisis for the UAE economy has been limited so far. \"The oil price fall, which has lost more than 10 per cent in the recent days, has contributed to this movement. \"At the same time, UAE markets had witnessed a strong rally during the first quarter. Some investors have been encouraged to book some profits when they witnessed the poor international news flow.\" Further compounding the local uncertainty is fresh concern over transparency levels in the UAE with Arabtec in particular coming under the spotlight on speculation over Aabar Investments\' stake in the company. \"It will be important to see how ESCA treats these developments regarding Arabtec and whether they introduce rules to protect minorities including retail investors,\" said Anastasios Dalgiannakis, institutional trading manager at Mubasher Financial Services. \"Arabtec was the main driver of the index\'s rally in the first quarter, but it has also contributed to the recent correction. \"There are questions around corporate governance and ESCA needs to take this opportunity to formulate new regulations. \"The main catalyst is the MSCI announcement next month. In theory, Dubai should be eligible this time around for an upgrade but foreign investors remain ambivalent about the outcome. \"Local indices have effectively been influenced by their correlation with international markets while foreign interest also remains muted.\"