Arabtec’s shares embarked on a roller coaster ride yesterday. While retail investors appeared to be fretting about the fate of the former chief executive’s stake, institutional investors were looking ahead to Thursday’s board meeting as an indication of what to expect from the company’s new managers.
Arabtec plummeted as much as 9.8 per cent during the early part of yesterday's trading before recovering to close down 1.7 per cent.
“There’s no explanation for the reaction today,” said Marwan Shurrab, fund manager and head of trading at Vision Investments & Holdings in Dubai. “It’s retail going up and down and it all depends on mood and sentiment. There’s no fundamentals behind it.”
The volatility on Arabtec’s shares yesterday was because of a “perception of no clear deal on the ex-CEO’s stake and a spillover from[Sunday’s] trade”, said Amer Khan, a senior executive at Dubai-based Shuaa Capital.
It was the second trading day of losses since the company’s major shareholder, Aabar Investments, said it was “studying different options for its stake but that any talks on a deal would remain confidential”.
Last week, reports said that Aabar was in talks to buy at least part of the 28.8 per cent shareholding owned by the former chief executive Hasan Ismaik, who resigned last month, followed by the redundancy of hundreds of Arabtec staff.
In a statement on the Dubai bourse website yesterday, Arabtec said its board of directors would meet on Thursday to review and approve: the minutes of the previous board meeting, reports and recommendations, and the financial statements for the second quarter along with “any other business”.
“Arabtec will be discussing the business performance, maybe restructuring and talking about the strategy itself”, said Tareq Qaqish, the head of asset management at Al Mal Capital in Dubai.
“Aabar is the strategic investor so if they want to discuss the increase of their stake, it won’t be discussed during Arabtec’s meeting, but Aabar’s. Therefore I don’t expect to see any surprises during the meeting,” Mr Qaqish said.
“What is really important from our point of view is to see how the new management will take the company going forward. But in terms of volatility of price and [the future of Mr Ismaik’s stake] I don’t believe we will see news coming out of that meeting.”
Yesterday Arabtec's shares erased some of their losses during the second half of the trading session, as investors bought up what they saw as a laggard stock. Arabtec closed down 1.7 per cent at Dh4.38 a share on the Dubai Financial Market. Dubai's main equity index ended 2.5 per cent up, at 4,724.05 points.
“What helped Arabtec today was the market,” Mr Shurrab said. “It was able to rebound and fall into positive territory, which helped Arabtec enormously because it was limit down and hence had the biggest potential to recover.”
Follow The National's Business section on Twitter