There is now a real anger among investors at the rolling daily crisis called Arabtec. It focuses on the apparent inability of the company or its owners to appreciate the damage that is being done to UAE markets, as well as the seeming powerlessness of the authorities to do anything to stop it.
The fury spreads from UAE retail investors who believed the Arabtec hype, to international investors newly tempted into UAE markets, to some policymakers, exasperated by the daily convulsions in the boardroom and on the trading floor.
It is no exaggeration to say that there is a serious risk the UAE’s financial markets are being brought into disrepute.
These are the questions irate investors are bellowing: what will happen to the 28 per cent of the company owned by Hasan Ismaik, the former chief executive? Is the ambitious strategy of global expansion he put in place still viable? Does Arabtec still have the backing of Abu Dhabi through Abaar? What will the fiasco mean for other companies, like Emaar, planning stock market listings? And what can be done to ensure this never happens again?
The Securities and Commodities Authority has been silent throughout. Insiders say the SCA is privately furious too, and wants to know who has been trading Arabtec shares like cheap stall trinkets over the past month. If it can find out the motives of these speculators, it might be able to prevent it in future.
The three UAE exchanges are anxiously concerned about the effect on their reputations, carefully honed for the MSCI upgrade and via investor roadshows in recent months. One plan being discussed is for a suspension of trading in Arabtec, followed by the establishment of a top-level inquiry to get to the truth – urgently.
That seems a sensible course of action. But little of the recent history of Arabtec has made any sense.
fkane@thenational.ae
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