Dubai-based construction giant suffers further day of share price slump as bourse closes down 2.35%
Arabtec shares fell 6.45 percent by the close of trade on Sunday in what marked a continuation of the UAE builder’s downward trend on the Dubai bourse.
The share price when the Dubai Financial Market (DFM) closed at 2pm on Sunday was AED2.90 ($0.78).
Other property-related stocks were also down, with Union Properties trading 7.29 percent lower in the first two hours of trade to AED1.78. Shares in Emaar, Dubai Islamic Bank and Drake & Scull were also down.
Overall the index was down 2.35 percent to 4,123 points.
Shares in the Dubai construction firm also fell on Thursday after a bounce in the last session, taking the steam out of a rally on the emirate's bourse.
After swinging wildly this month in response to Arabtec’s gyrations, the Dubai index is down 22 percent from its multi-year peak in mid-May, though still up 25 percent year-to-date. With the Ramadan lull and few fresh, positive catalysts on the horizon, the market will stay vulnerable to profit-taking, fund managers believe.
Arabtec shares have already lost over 50 percent of their value in the past month, following a decision by major shareholder Aabar Investments to reduce its stake in Arabtec earlier this month, the resignation of the CEO and top shareholder Hasan Ismaik last week and news of wide scale job cuts.
Even though Arabtec has reassured investors it will continue expanding, it remains unclear who will become its new full-time chief executive following the resignation of Ismaik this month.
Investors are also concerned about the fate of Ismaik’s 28.85 percent stake in Arabtec.
In an attempt to hose down panic, Arabtec chairman Khadem Abdulla Al Qubaisi said last Wednesday that the company’s restructuring will not damage its ability to proceed with its expansion plans.
In his statement to the Dubai bourse on Wednesday, Qubaisi said Arabtec's financial position remained solid and that it was committed to growing and maximising returns to shareholders. He repeated that the company had no intention of delisting its shares from the market, contrary to rumours.
"We have implemented a limited restructuring process, aimed at controlling resources, without compromising the needs of projects in progress and the established expansionist plans,” he said.
Qubaisi did not, however, comment on the future of specific projects, including billions of dollars of contracts given to it by Aabar in the United Arab Emirates, and a $40bn deal to build one million homes in Egypt over coming years.
He said Arabtec was "keen to retain" the managerial and technical teams in its various departments to handle projects. But he did not discuss the make-up of Arabtec's future management team, Arabtec's relationship with Aabar, or what might happen to Ismaik's 28.85 percent stake in Arabtec.