Dubai’s stock market recorded its biggest one-day gain in nine months as investors hoped for the end of an Arabtec-led market rout.
The Dubai Financial Market, which had shed 22.5 per cent of its value in June, gained 7.92 per cent yesterday, the most since September, closing at 4,389.94.
Brokers attributed yesterday’s gains to a slowing of margin calls on Tuesday, and signs of greater clarity from the management of Arabtec, alternately the darling and bête noire of the Dubai market.
Arabtec’s shares have been pummeled during the month of June, losing more than 60 per cent of their value – dragging the rest of the Dubai bourse with it – following the resignation of the chief executive Hasan Ismaik on June 18.
Since Mr Ismaik’s abrupt departure there has been widespread uncertainty about the commitment to the company of its Abu Dhabi shareholder Aabar Investments, which had reduced its shareholding to 18.85 per cent on June 12 (it currently stands at 18,94 per cent), and rumours that the contractor would cancel a number of high-profile projects.
Investors reacted positively to news that Arabtec's management would hold a press conference to address a number of the issues facing the company yesterday afternoon.
The company’s shares closed up 14.93 per cent at Dh3.31, even before the event started.
While the press conference did not address all issues facing the company, clarity on the company’s project book was especially welcome, according to Saad Chalabi, a trader at Abu Dhabi’s Al Ramz Securities.
“They’ve clarified a few things that they needed to clarify, specifically that there were no projects being cancelled and that everything’s going forward OK, especially their Egypt project,” he said, referring to the company’s US$40 billion affordable housing project with the Egyptian army, announced in March.
“That kind of guidance was required from management, and we’re happy that it’s finally out, which at least stabilised the stock, which therefore stabilised the rest of the market.”
Arabtec’s share rise had a knock- on effect on the rest of the bourse. Union Properties, Deyaar, Drake & Skull International, DFM and GGICO all closed up more than 14.5 per cent on the day.
Mr Chalabi said he expected the market to continue to rise during this morning’s trading, before investors begin to book profits later in the day.
“Over the next week we should see things begin to stabilise and the volatility should start to drop.”
jeverington@thenational.ae
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