Gulf Finance House stock takes a break from Dubai Financial Market for restructuring

Hisham Alrayes, the chief executive of Gulf Finance House, will have reduced its share capital twice in six months. Razan Alzayani / The National

The most-traded stock of the past 12 months will be missing in action, at least until Tuesday, as trading on the Dubai Financial Market resumes on Sunday.

The identity of that most traded stock may come as a surprise. It’s not Emaar Properties, the largest weighted stock on the Dubai Financial Market. Nor is it Arabtec, the highest-value traded stock of the past year.

The honour of the DFM’s most traded stock by volume of the past year belongs to the Bahraini financial group Gulf Finance House, whose shares were last traded at 23.3 fils each on Thursday.

While Emaar hogged the headlines on Thursday when its shares closed over Dh8, GFH was the highest-volume traded stock of the day. About 305.3 million GFH shares changed hands on the Dubai bourse on Thursday, more than the two next-most traded stocks – Damac Properties and Deyaar Developments – combined.

However, the shares will be absent from the bourse on Sunday and Monday as the company undergoes its second capital reduction plan in six months.

The plan, outlined by the company last month, will involve the reduction of its share capital to US$598 million from $1.49 billion to reduce accumulated losses.

GFH completed a similar move in November, in which its paid up capital was reduced to $837.9m from $972.3m.

GFH announced an annual profit attributable to shareholders of $11m for last year, compared with a loss of $18m for 2013. It was its highest profit since 2008.

On expectations for this year, GFH’s chief executive, Hisham Alrayes, said: “We expect 2015 to be an important year for GFH as we look forward to conclude a number of acquisitions to enhance the balance sheet, implement our strategy and realise more returns that allow us to make distributions to the shareholders.”

The company was hit hard by the global financial crisis, posting heavy losses in 2009 and 2010, and required several restructurings of its debt.

GFH’s high volumes are attributed to the company’s multiple stock listings in the UAE, Bahrain, Kuwait and London, offering investors the chance to play the stocks off one another to eke out a gain, said Khaldoun Jaradat, a trading manager at Brokerage House Securities in Dubai.

“The fact that the shares are listed in both Kuwait and the UAE offers arbitrage opportunities for investors in both countries,” he said. “They’re priced pretty low, so it’s a nice price for retail investors who want to trade and speculate.”

But such opportunities for trading the stock on two markets may be coming to an end.

Last week GFH announced it was pondering whether to continue its shares listing in London (where its shares are barely traded) and Kuwait.

While the company said that no decision had yet been taken, the news sent the shares in Dubai and Kuwait tumbling.

The popularity of GFH’s shares in Kuwait – where they are also the bourse’s heaviest traded stock – has attracted the attention of the country’s Capital Markets Authority.

The regulator announced last April that it had placed the company’s shares under monitoring for a period of six months, following a failure to account for unusual trading activity on its shares in 2013, a move the company unsuccessfully appealed.

More recently, the CMA suspended GFH’s shares for three days in February after the regulator said the company had failed to properly disclose its percentage ownership in a property in London it sold in November.

Here in the UAE, the Securities and Commodities Authority declined to comment on GFH shares, saying that it monitored stock trades of all listed companies as a matter of routine.

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