Share dilution fears drag UAE markets down

CLOSING BELL: Shares decline as investors fear dilution of their stocks, with leading companies seeking approval to issue convertible bonds - with video.

UAE bourses declined today as fears over share dilution hit trading. Rich-Joseph Facun / The National

Shares in Abu Dhabi and Dubai declined at the close of play as investors feared dilution of their shares as leading companies sought to raise capital through convertible issuances.

Aldar Properties, listed in Abu Dhabi, said it was calling an extraordinary general assembly meeting to seek approval to issue a convertible bond. The property developer said it was also considering selling certain assets. Aldar, which traded 43million shares, closed 4.5 per cent lower to Dh2.29 a share.

"This is clearly a disappointment for the market," said Walid Shihabi, chief executive of Shuaa Securities in Abu Dhabi. "There are fears of dilution, given the current conditions, investors would have much preferred companies make due with what they have or pursue the debt market."

The Abu Dhabi Securities Exchange General Index lost half a per cent to 2740.18. In Dubai, the largest listed contractor said it was seeking an approval to issue a 5 year convertible bond to the equivalent of Dh552m, in addition to rights issue by offering 398 million shares to existing shareholders.

Arabtec Holding, which traded 33.5 million shares, lost 3 per cent to Dh1.94. The Dubai Financial Market General Index closed 1.5 per cent lower to 1633.53.

Elsewhere in the region, Kuwait and Oman's measures remained flat at 6950.60 and 6918.59 respectively. Qatar's measure gained 1.6 per cent to 9137.89. The Saudi Tadawul All-Share Index gained 0.2 per cent to 6686.19.