By Neil Halligan
DFM dropped to its lowest level in 7 weeks over speculation a large volume of shares is set to be sold off
Dubai shares dropped to their lowest level in over seven weeks, as speculation grew that a sizeable amount of Arabtec’s shares are about to be dumped into the market.
The DFM General Index declined 3.4 percent to 4,912.14 at the close on Wednesday, the biggest drop since July 20.
Shares in the largest publicly traded construction company in the UAE, Arabtec, dropped 9.18 percent to AED4.45 ($1.21), as rumours grew that former chief executive officer, Hasan Ismaik, was about to offload some of his 28 percent shareholding.
“There are rumours that he is going to offload his Arabtec stake in the market,” Nabil Rantisi, managing director of Mena Corp. Financial Services, told Bloomberg. “People were afraid that he would start dumping and people got panicked and started to sell.”
Arabtec’s share price has become volatile ever since Ismaik resigned in June. A subsequent sell-off saw 20 percent wiped off the value of the benchmark index.
Investors’ concern appeared to have eased after Arabtec chairman Khadem Al Qubaisi promised to improve transparency and insisted that the company retained the support of Aabar.
But the volatility has returned with more speculation about shares being sold off.
DFM is a world recongnised market having investors from all over the world. It's a shame that a rumour affects the entire market so badly. The fundamental principals of good corporate goverance structure and a strong oversight by regulatory agencies is the need of the hour to build confidence in DFM.
If this market falls on speculation of someone selling off a single stock (arabtec)...then am not sure i should be investing in this market