Arkan Building Materials shares fell 10 per cent for a second consecutive day on the Abu Dhabi Securities Exchange today in the wake of the suspension of four investors from trading for manipulating Arkan shares. Investigations by the Securities and Commodities Authority (SCA) into Arkan's inflated share price resulted in the suspension of the four for violating trading rules.
The investors are now banned by the SCA from buying stock in any UAE market for one year from March 1. The Abu Dhabi-based construction firm's shares have fallen more than 30 per cent since Feb 25, when the market regulator publicised the violation. The ADX and SCA declined to comment as investigations are continuing. Arkan shares rose 39.5 per cent between Feb 5 and Feb 11 to an all-time high, despite a slowdown in the construction and building materials sector.
Since Jan 1 last year, the ADX General Index has fallen more than 48 per cent, while Arkan shares have risen more than 7 per cent in the same period. Arkan shares fell 9.98 per cent on the ADX to close at Dh4.24 today. The construction company declined to comment. Analysts said they were surprised the regulatory authorities did not look into the inflated prices and demand a disclosure from the company at the time.
"Where was the SCA back in January or February?" asked Ayman al Saheb, the director of operations at Darahem Financial Brokerage, based in Dubai. "Why did it take until [now] to issue the statement? Why didn't the SCA force the company to issue a disclosure as to why the company recorded such high gains? These are the questions that need to be answered." Mr al Saheb said it was common for companies to send brokerage firms notices explaining marked fluctuations in share prices, and that this should become obligatory. "Why is this not enforced? This could be a deterrent for future foreign investors," he said. "We didn't know why the shares were skyrocketing given that the industry should not witness gains."
Analysts said at the time that a group of investors based in Abu Dhabi had been propping up Arkan shares. shamdan@the national.ae