Stock market watchdog says construction firm took all necessary steps to ensure good corporate governance
The UAE's stock market regulator said construction firm Arabtec had obeyed disclosure rules during a period of management turmoil at the company which slashed its share price and dragged down the entire market.
The Securities and Commodities Authority issued its statement on Wednesday after fund managers and other investors criticised the level of disclosure by the company following last month's abrupt resignation of chief executive Hasan Ismaik.
Until it held a news conference on Wednesday, Arabtec did not clarify issues such as how Ismaik's departure affected its relationship with key shareholder Aabar. Uncertainty over the firm helped to drag the Dubai market down as much as 31 percent from its mid-May peak.
However, the SCA said on Wednesday that it had taken all necessary steps to ensure proper disclosure in the market and good corporate governance. It said it had pressed Arabtec to react to rumours about it and clarify its outlook.
It also said it could not have suspended trading in Arabtec shares during their plunge, because that action could only be taken under circumstances specified by rules.
"This does not apply to any case of the companies listed currently on the market as they all play according to laid down rules of listing, disclosure and trading," the SCA said.
Traders said the extent of the market's recent plunge was partly due to investors bailing out of leveraged positions.
"Appropriate actions are being taken against any brokerage company which exceeded its approved lending limit in margin trading," the SCA said without giving details.
It also said it expected second-quarter corporate earnings in the UAE, to be announced in coming weeks, to show a continuous uptrend and therefore help to boost confidence in the stock market.