x Abu Dhabi, UAEFriday 21 July 2017

Arabtec shares rebound drives Dubai Financial Market to starring role

Arabtec’s share price rose by as much as 14.3 per cent in intraday trading, before closing at Dh4.86, higher than the previous close of Dh4.35.

Arabtec’s share price has risen 86 per cent since its June trough of Dh2.61. Reuters
Arabtec’s share price has risen 86 per cent since its June trough of Dh2.61. Reuters

Arabtec’s 13.5 per cent rise powered the Dubai stock market Financial Market upwards yesterday. The builder’s gains ensured that the DFM General Index, which rose 3.3 per cent, became the best-performing among 90 international bourses.

Arabtec’s share price rose by as much as 14.3 per cent in intraday trading, before closing at Dh4.86, higher than the previous close of Dh4.35.

This marks a dramatic reversal for the crisis-hit builder, whose shares lost more than 60 per cent of their value last month following the resignation of the chief executive Hasan Ismaik, leading to a sell-off of Dubai equities in June.

The DFM was dragged into a bear market last month, when its main index lost 27 per cent of its value, dipping to 3,568.41, as retail investors buying on margin were forced to liquidate their holdings across the market.

The index now stands at 88 per cent of its May 14 peak of 5,374.11, closing yesterday at 4765.64, as analysts express optimism about the health of the property and construction sector, with Arabtec’s gains nearly matched by Deyaar Development’s, which rose 12.1 per cent yesterday.

Arabtec’s share price has risen 86 per cent since its June trough of Dh2.61, although it remains significantly below its May peak of Dh7.40.

Still, investors who bought Arabtec shares on January 1 would be sitting on a healthy year-to-date gain of 137 per cent.   

While Arabtec’s management remained conspicuously silent over June, the company has recently sought to regain the confidence of investors. A press conference earlier this month appears to have soothed shareholder nerves, after Khadem Al Qubaisi, the chairman of both Aabar Investments and Arabtec, suggested that Aabar, owned by International Petroleum Investment Company (Ipic), a politically important investment vehicle, could raise its stake in the builder.

“From the moment the chairman came out through the press conference where they came and highlighted to investors what was happening, the stock had a decent rally,” said Taher Safieddine, assistant vice president of equity research at Shuaa Capital.   

Aabar’s continued support is likely to boost investor confidence, Mr Safieddine said.

“Aabar is there for the long term, because they need a big contractor with a decent track record to execute their projects, especially given planned growth in Abu Dhabi’s infrastructure spending,” he said.    

Mr Al Qubaisi also said that Arabtec would focus on its core business areas, and that the company did not need to employ specialists in mergers and acquisitions. These remarks have been interpreted by analysts as a sign that Arabtec would rein in the ambitious expansion plans hatched under Mr Ismaik.

The contractor “is proceeding with all projects as scheduled without cancellation or changes”, the company said at the time.

On Monday, Arabtec bought quarter-page advertisements in The National, Gulf News and Al Bayan, inviting investors to contact its investor relations team. The adverts are sloganed: “Arabtec is closer to you than ever”.

The Abu Dhabi Securities Exchange has also benefited from renewed calm in the industrial sector, having risen 8 per cent since its June bottom of 4,551.02. Yesterday the index gained 0.3 per cent to close at 4,927.62.

abouyamourn@thenational.ae

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