People walk past the Arabtec headquarters in Abu Dhabi. Arabtec closed 1.8% down yesterday, after topping trading volumes in Dubai. Its shares have been gyrating wildly on speculation that Aabar Investments, a key shareholder, may raise its 18.94% stake in the company.
Reuters, QNA/Dubai
Stock markets in the United Arab Emirates rebounded yesterday from a sharp drop in the previous session, although Dubai remained extremely volatile because of swings in construction firm Arabtec. Bourses in Qatar and Egypt retreated.
Dubai’s index closed up 2.5% after dropping as much as 4.3% shortly after the opening, when shares in Arabtec plunged their 10% daily limit.
Arabtec eventually closed only 1.8% down, after again topping trading volumes in Dubai. It has been gyrating wildly on speculation that Aabar Investments, a key shareholder, may raise its 18.94% stake in the company.
In a brief statement on Sunday, Aabar disappointed investors by saying it was considering its options towards Arabtec but declining to elaborate. This triggered a fresh slide by the stock.
Arabtec said yesterday morning that its board would meet on Thursday afternoon to review its second-quarter earnings statement and other reports and recommendations, but it did not give any details, and there was no sign that the meeting would be other than routine.
Many retail investors initially took leveraged positions in Arabtec and have then had to sell other UAE stocks to meet margin calls on their positions. Even so, some fund managers are mystified - and appalled - at the way in which Arabtec, Dubai’s sixth biggest company by market capitalisation, has come to set the tone for the Dubai market in recent weeks.
“I am not sure why this correlation has appeared between Arabtec and the whole market, which is illogical,” said Ali Adou, portfolio manager at The National Investor in Abu Dhabi.
“There are strong fundamentals in the UAE and investors should not relate what’s happening with a single company to the whole market.”
Abu Dhabi’s index, which fell as much as 2.0% earlier yesterday, also recovered and closed up 1.5%. Top real estate developer Aldar Properties ended 4.3% higher after sinking 8.3% in the morning.
Telecommunications operator Etisalat added 0.9% after reporting a 26% jump in second-quarter profit on Sunday. It made a net profit of 2.5bn dirhams ($681mn) in the three months to June 30, beating the 2.19bn dirham average forecast of analysts polled by Reuters.
The Qatar Stock Exchange index dipped for the second consecutive day yesterday, down 65.62 points (-0.5%) to close at 13,089.96 points.
Qatar Navigation (Milaha) was one of the main drags, dropping 4.4%.
The company posted a second-quarter profit of 169mn riyals ($46mn) yesterday morning, widely missing the forecast of QNB Financial Services, which had expected a profit of 218mn riyals.
Gulf International Services pulled back 1.7% after jumping 2.9% in the previous session on news that it had won a 1.2bn riyal rig supply contract from Qatar Petroleum.
Al Khaliji Commercial Bank edged up 0.7% as it named chief operating officer Hesham Ezzdine as its acting group chief executive. It had slid 1.8% in the previous session after reporting a 5.9% decrease in second-quarter net profit.
The traded value reached QR 583.513mn with a volume 11,620,913 shares from 5,872 transactions.
The market capitalisation reached QR 705.14bn.
Banks and financial services sector index went up marginally by 16.14 points (+0.51%) to 3,171.50 points.
Consumer goods and services sector index too went up slightly by 31.58 points (+0.45%) to 7,045.36 points.
Transport index went down 51.44 points (-2.22%) to 2,266.03 points, followed by telecoms index, down 30.01 points (-1.82%) to 1,620.07 points and real estate index went down 39.79 points (-1.36%) to 2,887.26 points.
From the 43 companies listed on the Qatari bourse, 26 declined yesterday, 13 made gains and four remained unchanged.
From the banks group, Qatar National Bank (QNB) made fair gains yesterday, up 1.7% to close at QR 179 from Sunday afternoon’s QR176.
Two companies from the insurance sector made gains — Islamic Insurance up 1.56% to QR84.70 and Qatar Insurance up 0.56% to QR89.
Qatari individual investors bought a volume of 5,742,528 shares of 41 companies worth QR211.27mn (36.21%).
Qatari individual investors sold a volume of 7,488,494 shares of 42 companies worth QR385.779mn (66.11%).
Qatar institutional investors bought a volume of 2,831,991 shares of 32 companies worth QR211.388 (36.23%).
Qatar institutional investors sold a volume of 1,219,800 shares of 24 companies worth QR56,304,475 (9.65%).
Egypt’s bourse pulled back 1.2% with most stocks in the red as market players cited a lack of positive catalysts and prospects for slower economic growth following austerity measures and an interest rate hike.
“People are indecisive at the current stage,” said Chamel Fahmy, vice president for sales and trading at HC Securities and Investment in Cairo.
Egypt’s central bank raised benchmark interest rates last Thursday in a surprise move seen as an attempt to hold down inflation after the government slashed subsidies on fuel and electricity.
Among other factors limiting investors’ appetite is the fact that fresh financial aid from the Gulf has not been announced as quickly as investors had hoped, and “political risk from the region and specifically the Palestinian conflict”, Fahmy said.
However, “we’re not seeing aggressive selling pressure,” he said, adding that strong second-quarter earnings could change the picture.
Elsewhere in the Gulf, the Saudi index edged up 0.1% to 9,750 points, the Kuwait index edged down 0.2% to 7,071 points, the Bahrain index slipped 0.03% to 1,481 points and the Oman index fell 0.1% to 7,182 points.
