Construction major falls third day in a row following suspension
23/07/2014 02:25 AST
The Dubai Financial Market (DFM) index slid 0.98 per cent on Tuesday to end the day’s trade at 4,678.72, while the Abu Dhabi Securities Exchange (ADX) general index fell 0.21 per cent to reach 4,977.22.
Meanwhile, Dubai powerhouse, Arabtec, dropped for the third day in a row as share prices went down 3.42 per cent to reach Dh4.23. The company’s stocks continued to top DFM in terms of value of trade as it accounted for 49 per cent of the total value traded.
Arabtec shares kicked off trade at a price of Dh4.43, and plunged in the first 45 minutes to reach a minimum of Dh4.10. This was followed by a slow incline until the market closed.
Despite three consecutive days in the red, the construction giant’s share prices mark a 52.6 per cent increase since beginning of July.
Other powerhouses in Dubai also ended the day with losses as Gulf Finance House fell 5.41 per cent, Union Properties slid 0.94 per cent, and Deyaar Developments went down 0.79 per cent.
However, Emaar gained 0.41 per cent, and Dubai Ports World rose 0.5 per cent.
Sensible valuations
Saleem Khokhar, head of equities at the National Bank of Abu Dhabi asset management group, commented on the market performance saying, “I wouldn’t read too much into [the index] being down for one day. [The] DFM has been volatile after the Arabtec suspension. Prior to that, it had rallied quite strongly. Overall, I think we’re at what I would call pretty sensible valuations for the UAE market as a whole.”
He expected volatility to continue throughout the summer period until September.
Discussing the performance of Arabtec, Khokhar said, “On a fundamental basis, in terms of the projects of Arabtec, it’s just fine. What’s causing the market volatility is sorting out the stake of the ex-CEO, [Hasan Ismaik]. I’m sure at the end of the day an agreement will be reached; it’s just a matter of how this will be done and in which time frame.”
On Tuesday, the Saudi Arabian government said the cabinet has given permission to the country’s financial regulator to open up the stock market to direct investment by foreign institutions.
“I think that will have a wider impact on the region as you see the larger international players looking at the region much more carefully because Saudi brings quite a lot of liquidity and depth in terms of sectors, so for me, it’s a big positive,” Khokhar said.
He added that there might be some pressure on the short term on the UAE markets as local investors might turn their heads to the Saudi market as an alternative for investing their money. In the long term, however, Khokhar said the move will bring more international investors to the region.
Of the 32 stocks traded on DFM, 21 went down, seven went up, and four remained unchanged. Of the 32 stocks traded on ADX, 10 advanced, 11 declined, and 10 remained flat.
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