Arabtec shares plunge 10% in morning trading
Troubled stock pulled overall DFM index down by 3.72%
Shares in Arabtec, the Dubai contractor whose value has dropped by more than 50% in six weeks, fell by as much as 10% to AED2.61 in early trading on the Dubai Financial Market (DFM) on Monday morning.
The stock pulled the overall index down by 3.72%.
Other stocks related to the construction industry followed suit. Union Properties was down by 9.55% and Drake & Scull International had fallen by 8% by 10.30am.
Bellwether stock Emaar Properties fell by 2.29.
The collapse marks a continuation of the builder’s downward trend on the Dubai bourse. Shares in Arabtec dropped by 6.45% on Sunday, while the index slid by 2.35%.
After swinging wildly this month in response to Arabtec’s gyrations, the Dubai index is down 22% from its multi-year peak in mid-May, though still up 25% year-to-date. With the Ramadan lull and few fresh, positive catalysts on the horizon, the market will stay vulnerable to profit-taking, fund managers believe.
The Arabtec share collapse followed a decision by major shareholder Aabar Investments to reduce its stake in Arabtec earlier this month, the resignation of the CEO and top shareholder Hasan Ismaik last week and news of wide scale job cuts.
Even though Arabtec has reassured investors it will continue expanding, it remains unclear who will become its new full-time chief executive following the resignation of Ismaik this month.
The Abu Dhabi Securities Exchange dropped by 1.1% during the same period.