Analysts mystified by Waha Capital plunge

Volume soars to 19 million shares as price declines 5.2%

The trading mystery from yesterday: what is going on with Waha Capital? On a day of light trading, the Abu Dhabi-listed investment company dropped 5.2 per cent to Dh0.54, a 52-week low. Perhaps more intriguing was that more than 19 million shares were traded, accounting for more than 35 per cent of the total volume on the Abu Dhabi Securities Exchange.

Analysts were mostly puzzled. "It is not due to any company-related news," said Mohammed Ali Yasin, the managing director at Shuaa Securities. "We don't have any guidance from the company which could reflect the fall." Waha Capital has fallen 45.4 per cent from its 12-month peak in October. The 52-week daily average trading volume for the company is 10.6 million shares, but the stock has been rather dormant, in line with the markets, since the beginning of April, with occasional spikes in volume.

"There are few buyers and sellers in this stock, which implies there is not much market participation in the stock. These are large-ticket orders executed by few traders," said Ali Khan, the managing director and head of equities at the investment bank Arqaam Capital in Dubai. "From the size of the chunks sold, it appears to me large investors are offloading positions in the stock," he added. The company is 14.71 per cent owned by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, and 5.13 per cent by a private investor. The remaining 80.16 per cent is held by the public. It has investments in the transport, property and financial services sectors.

Waha Capital has a mandate to raise Dh12 billion (US$3.26bn) for the UAE's military, its chief executive, Salem Rashid al Noaimi, told Bloomberg last month. More than half of that total was raised last year. It would seem those deals would be a boon to the stock, not a drag on it. The mystery remains.