Amlak and Arabtec mystified by surge, as stocks go into reverse on DFM

Arabtec Holding and Amlak Finance have said they are at a loss to explain recent surges in their share prices, even as both stocks reversed course in trading on Thursday.

The Dubai Financial Market’s chief operations officer Hassan Al Serkal wrote to both companies on Wednesday, asking them to explain the dramatic rises in their share prices over the past week.

The rise has been most pronounced for Amlak, which saw its shares rise an incredible 128.43 per cent in value between last Tuesday and Wednesday (between June 2 and 10), after its shares resumed trading last week following more than six years of absence.

“Amlak does not have any new material information that may explain the movement of the company’s shares in the market since the resumption of trading,” the company said in a response to Mr Serkal’s letter, posted on the DFM website on Thursday morning.

Arabtec was similarly reticent regarding a huge uptick in trading on its shares on Tuesday and Wednesday, which resulted in a share price rise of 27.4 per cent over the two-day period.

Yesterday, the company said in a statement on the DFM that “no developments” have taken place that require a stock market disclosure.

Traders say the surge in the companies’ share prices – that has spilt over into other real estate stocks including Union Properties and Deyaar Development – is an almost entirely retail investor-driven phenomenon.

“It looks like the actions of a few very high net worth local investors,” said Khaldoun Jaradat, trading manager at Brokerage House Securities in Dubai.

“It may be they have recently pulled money out of the local real estate market [and] are now turning their attention to certain stocks, which gets the attention of other retail investors, and it spirals from there.”

The surge in share prices had nothing to do with changes in the companies’ fundamental values, according to Muhammad Shabbir, the head of equity funds and portfolios at Rasmala Investment Bank in Dubai. “It is a trading frenzy by retail investors who are trying to make some quick money on the stocks’ movements,” said Mr Shabbir.

Gravity finally had its revenge , as both stocks ended limit down, sparking a general sell-off on the Dubai Financial Market.

After once again rising to their upper limit in the first half-hour of trading, Amlak shares went into reverse, eventually closing down 9.87 per cent at Dh2.10.

Arabtec shares, meanwhile, ended the day down 9.9 per cent at Dh2.64. The general index closed 2.73 per cent lower.

However the volatility of stocks such as Arabtec Holding and Amlak Finance has so far not put off foreign institutions from investing in more secure blue-chip stocks, according to Julian Bruce, the head of institutional trading in Dubai at EFG Hermes, a leading investment bank in the Mena region.

“It obviously makes people proceed with a bit more caution, but stocks that are more meaningful to institutional investors are broadly unaffected by what is happening across the wider market,” he said.

“There’s a lot of volatility in the wider market but Emaar Properties, for example, is flat on the week.

“If you stick with larger cap stocks, which are more widely held by institutions, then volatility is not really a problem.”

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