Investors called for new disclosure rules as another Arabtec rout dragged the Dubai Financial Market into bear territory.
Arabtec stock fell as much as 9.9 per cent in the first 30 minutes of trading, closing the session at Dh3.46 a share.
It has lost 65 per cent of its value since its May peak of Dh7.7 per share.
Shares cannot lose more than 10 per cent in a single trading session under UAE market rules aimed at controlling volatility.
The DFM fell 4.32 per cent yesterday, driven by Arabtec’s losses, and is down 25.4 per cent since its May peak.
Bloomberg earlier reported that hundreds of employees, including the company’s head of mergers and acquisitions, the chief operating officer, chief information officer, and chief risk officer had lost their jobs. Each of these individuals joined Arabtec shortly after the appointment of Hasan Ismaik, the chief executive who resigned last week.
A spokesperson for Arabtec declined to comment on the job losses, but said that “there have been a lot of rumours”, and that the company would shortly publish a statement on the DFM.
Investors and analysts questioned why the regulator, the Securities and Commodities Authority (SCA), had not intervened to compel Arabtec to disclose information or suspend trading.
SCA was unavailable for comment.
“The DFM has to investigate and force the company to host a press conference and explain to the investors” why the price has changed so dramatically, said Wadah Al Taha, the chief investment officer at Al Zarooni Group, an investment company based in Dubai.
“Without transparency, we are leaving the door open for rumours and speculation. The market and the stock are both bleeding unbelievably.”
“Even if [the DFM] has to suspend the company, they must do that,” said Mr Al Taha.
Ali Adou, portfolio manager at The National Investor, Arabtec’s ninth largest shareholder, said that “some sort of intervention from the regulator would have been welcomed, such as enforcing public disclosure to protect shareholder interests”. Failure to disclose information, or inaccurate disclosure, “will affect institutional investors’ confidence in the corporate governance and might affect investment decisions,” he added.
“Arabtec is now on the platform of institutional investors. [And] the MSCI index makes this much more important.”
One Dubai-based trader, who wished to remain anonymous, said: "We have been scrutinised by the entire financial community in the world for the past few weeks after the MSCI inclusion, and what we have shown them is the Arabtec story. How do you think investors will react to that?"
A UAE-based asset manager, who declined to be named, said: “The exchange should have stopped trading the stock today.”
SCA should have demanded “the suspension of trading, disclosure of relevant information, and then [they should have] monitored disclosure”, the asset manager said.
* With additional reporting by Hadeel Al Sayegh
abouyamourn@thenational.ae
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