DFM falls most since July
Drop due to Arabtec stake sale rumours and Emaar Malls IPO
Dubai shares fell the most in more than seven weeks as Arabtec Holding Co slid on speculation its largest shareholder will cut his stake and as investors raised cash before the Emaar Malls Group initial public offering.
The DFM General Index declined 3.4 per cent to 4,912.14 at the close, the biggest drop since July 20 and the largest decline on Wednesday among more than 90 gauges tracked globally by Bloomberg. Arabtec, the biggest publicly traded construction company in the UAE, plunged 9.2 per cent on volume 1.6 times the three-month daily average. Emaar Properties fell 2.7 per cent.
Arabtec was at the centre of a selloff in June that wiped more than 20 per cent off the value of the benchmark index, triggered by senior management changes and investor concern the company may be losing Abu Dhabi-government backing. Former Chief Executive Officer Hasan Ismaik, who owns about 28 per cent of the company, said last month he rejected an offer from Aabar Investments to buy part of his holding.
“There are rumours that he is going to offload his Arabtec stake in the market,” Nabil Rantisi, managing director of Mena Corp. Financial Services, said by phone from Dubai. “People were afraid that he would start dumping and people got panicked and started to sell.”
Dubai-based Arabtec fell to Dh4.45, the weakest close since August 24. Emaar, which is selling at least 15 per cent of its malls unit next week, decreased for a second day to Dh10.95, the lowest in almost two weeks.
The developer of the world’s tallest tower will open the IPO for subscription on September 14 and shares of the unit will start trading in Dubai on October 2, according to a statement on the bourse’s website this week.
“A lot of liquidity is leaving the market” as some investors raised funds before the Emaar Malls share sale, according to Ahmed Shehada, the Abu Dhabi-based head of advisory and institutions at NBAD Securities. “It’s retail investors selling across the board.”
Emaar will allocate about Dh5.3 billion ($1.4 billion) of proceeds from the sale to pay dividends, the developer said last month. At least 10 per cent of the shares will be allotted to Emaar shareholders as of September 10.
“People are trying to take profits in order to take part in the IPO,” said Marwan Shurrab, fund manager and head of trading at Vision Investments in Dubai. “Any selling pressure you see on the market is going to be related to that.”
Another negative factor for equity markets globally on Wednesday is indications that the US Federal Reserve could raise interest rates earlier than expected.
Iterest rates in the UAE are expected to track US rates closely because of the dirham’s peg to the dollar, and the Dubai market is dominated by property-related stocks.