Shares in Dubai's Arabtec tumble to a six-week low on fears of a significant shares dilution, sparking selling in UAE markets, while Qatar's measure snaps losses.
Arabtec plans to raise AED4.8bn of capital through a rights issue and AED1.7bn via a convertible bond to finance growth, the builder said.
The company will issue 3.2bn shares at AED1.5 per share, a near 50 percent discount to its current market price. The capital hike amounts to a more than 50 percent increase in its market capitalisation.
Arabtec slumps 9.8 percent to AED2.67, its lowest close since January 16. Trading was thin as the stock hit its maximum permitted daily decline early in the day - allowing no further sell orders to be processed.
"Potential support of the 200 daily exponential moving average is around AED2.63, which coordinates nicely with the 50 percent retracement at 2.625 of the uptrend begun at the beginning of this year," says Bruce Powers, a technical analyst and corporate advisor at Orpheus Capital. "Given the significant move down today it wouldn't be surprising to see Arabtec drop below this potential support zone."
Next support levels are AED2.51 and AED2.40, he adds.
The contractor also replaced its CEO as part of a shake-up driven by Abu Dhabi state investment fund Aabar, its largest shareholder, that is tightening its grip on the firm.
"It's not a stock you want to be in right now - too many unknowns and changes," says a Dubai-based analyst. "Foreign owners will continue to exit. Today's sell-off was evidence of that."
Bellwether Emaar Properties escapes the selling, closing up 1.3 percent.
Dubai's benchmark sheds 0.6 percent to 1,927 points, continuing its sideways trading as it struggles to break through the 2,000 key psychological level.
The UAE capital's index slips 0.4 percent to finish at 3,045 points, easing away from Wednesday's 39-month high.
Investors book gains in some banks and real estate stocks. Heavyweight First Gulf Bank slips 1.1 percent, Aldar Properties sheds 1.9 percent and Sorouh Real Estate declines 1.6 percent.
In Qatar, the market lifts from an eight-week low as bargain hunters return. The index climbs 0.4 percent to 8,529 points.
Industries Qatar and Doha Bank advance 1.3 and 1.8 percent respectively. Qatar Investors rises 4.8 percent.
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