DFM index inches down 0.3% as Arabtec rallies

05/07/2017 05:56 AST

The Dubai Financial Market (DFM) index fell by less than 1 per cent on Tuesday as trade values were relatively high compared to the past week, with Dh485.2 million in the market.

The DFM index ended 0.28 per cent lower to reach 3,415.26 GFH Financial Group and Arabtec together accounted for around 60 per cent of the market’s total trade values. Arabtec share prices jumped as much as over 12 per cent in the first few hours of trade, ending the day 10.6 per cent higher at Dh3.23 after the company announced it has won a contract to build the UAE pavilion at the Expo 2020. The contract was for Dh353 million and went to the group’s wholly-owned subsidiary, Arabtec Construction.

The 10.6 per cent jump is the highest daily move in the stock since late May, according to DFM data.

“I think people have suddenly decided that [Arabtec share prices] have been beaten down quite a bit. The low in the past few days was Dh2.75, so it’s a fairly big swing to the current Dh3.23, and I think people saw Dh2.75 as too low,” said Sanyalaksna Manibhandu, director of research at the National Bank of Abu Dhabi Securities.

Arabtec last week completed its recapitalisation programme, which involved a rights issue and capital reduction. The programme aims to turn around financial performance and extinguish Dh4.6 billion in accumulated losses.

Meanwhile, GFH, the other small cap stock dominating trade on DFM, ended the day 0.91 per cent lower at Dh2.18, and was the most actively traded stock in the bourse in terms of value. The company on Tuesday said in a statement it has received approval from the Central Bank of Bahrain to acquire treasury shares up to 5 per cent of its total shares.

In the UAE capital, the Abu Dhabi Securities Exchange (ADX) general index slid 0.52 per cent to reach 4,391.61, with Dana Gas, also a small cap, being the most actively traded stock in the market.

“It’s the small cap stocks that are taking the lead, which is positive because it means people now want to take on risk. Just before and just after the Eid holidays, there wasn’t a lot of appetite for risk. People were looking at Saudi Arabia if they wanted to take on risk … but now, [appetite for] risk is back at least in the short term,” Manibhandu said.

Going forward, sentiment and liquidity are likely to be impacted by news coming out of Qatar regarding the rift with four Arab countries. Qatar’s deadline to meet a list of demands by the Arab states expires on Wednesday evening after Qatar got a 48-hour extension on the deadline.

Gulfnews