Shares in Arabtec, the Dubai contractor whose value has dropped by more than 50 percent in six weeks, fell by its daily limit of 10 percent to reach AED2.61 ($0.71) in early trading on the Dubai Financial Market (DFM) on Monday morning.
The stock pulled the overall index down by 3.72 percent. The DFM is down by 27 percent from its peak in May.
Other stocks related to the construction industry followed suit. Union Properties was down by 9.55 percent and Drake & Scull International had fallen by 8 percent by 10.30am.
Bellwether stock Emaar Properties fell by 2.29.
The collapse marks a continuation of the builder’s downward trend on the Dubai bourse. Shares in Arabtec dropped by 6.45 percent on Sunday, while the index slid by 2.35 percent.
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.
The Arabtec share collapse followed 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.
The Abu Dhabi Securities Exchange dropped by 1.1 percent during the same period.