Arabtec hits maximum price drop sending DFM tumbling

Rumour that Arabtec stock is going to be dumped into the market with no agreement between two major shareholders.

Hadeel al Sayegh

September 10, 2014

Updated: September 10, 2014 04:00 AM

 

Dubai stocks tumbled to their lowest level in more than seven weeks driven by speculation that a big chunk of Arabtec’s shares will be offloaded into the market.

Arabtec touched its maximum allowable one-day price drop of 10 per cent, known as its limit down, several times during the trading session. At the 2pm close, it was down 9.1 per cent to Dh4.45.

“The rumour is that the stock is going to be dumped into the market as there doesn’t seem to be agreement between the two big shareholders,” said Nabil Rantisi, managing director of brokerage at Mena Corp, said in an interview from Abu Dhabi today.

“This is what the retail is saying. It’s strictly rumour, not news. Everybody panicked and they started selling. The stock dropped to limit down, then went up a little bit, hit limit down, and went up a little bit,” Mr Rantisi said.

Arabtec has become a volatile stock ever since its chief executive, Hasan Ismaik, resigned in June and hundreds of staff were made redundant, provoking concern over the future of the company. Investors are focused on whether there is a potential buyer for Mr Ismaik’s 27.9 per cent stake. Late last month, Mr Ismaik told Bloomberg he was still in discussions with Aabar, the second biggest shareholder in Arabtec, after earlier rejecting an offer of Dh5 a share.

“There’s a rumour that Aabar asked SCA’s permission to sell 100 million shares and they got approval,” said Nabil Farhat, a partner at Al Fajer Securities. Calls and emails made to the market watchdog, the Securities and Commodities Authority, were unanswered.

“We heard that the Aabar deal with Ismaik is a no go,” said a broker who spoke on conditions of anonymity. “It’s just street talk right now.”

Dubai’s equity benchmark, the Dubai Financial Market General Index lost 3.3 per cent to 4,912.14 points.

Emaar Properties, which is hiving off its shopping malls business, fell 2.6 per cent to Dh10.95.

“Everything is linked to Emaar’s IPO at the moment and I expect more liquidation in the stock market in the coming days as investors free up cash to participate in the IPO,” said Marwan Shurrab, fund manager and head of trading at Vision Investments & Holdings in Dubai.

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