A bottomless pit? Suspended Arabtec stocks tumble further, drag Dubai's main index down
The Dubai Financial Market (DFM) index plunged after six consecutive sessions of going up, with a 5.99 per cent drop on Sunday to reach 4,609.67 on the back of a 9.9 per cent fall by powerhouse, Arabtec.
Arabtec share prices started the day at a price of Dh5, and immediately declined to Dh4.46 in the first 45 minutes of trade. The rest of the day was relatively stable without much trade, as the shares closed at a price of Dh4.46.
Despite so, the company topped DFM in terms of trade value as it made over Dh908 million — nearly 38 per cent of the total trade value.
Arabtec was suspended from trade on Thursday due to ambiguity on share ownership by Aabar Investments. On Sunday, Aabar released a statement saying that it is considering potential investments, without elaborating further on whether it would increase its stakes or not.
Other powerhouses in Dubai also crashed as Union Properties fell 9.63 per cent, Gulf Finance House declined 10 per cent, Drake & Scull International dropped 9.88 per cent, the DFM share price slid 8.89 per cent, and Emaar fell 4.52 per cent.
Mohammad Yasin, managing director of the National Bank of Abu Dhabi securities, warned that the fall in DFM meant that the damage from June has not been rectified yet.
“It looks like most of the driving volume was coming from speculators rather than long-term investors especially on the speculative stocks [like DSI, Deyaar, DFM, and Eshraq Properties]. What happened today is really going to scare away more of those long-term, stock-picking clients who we were hoping would invest with the positive news in the market,” he said.
Yasin added that the stock market is a reflection for the future of the economy, and thus, such falls in the market will lower the overall risk appetite of investors.
As for the outlook for DFM, he said “I’m worried that this negative volatility will drive people to less risky assets like bonds, and other safe assetsâ¦I think daily speculation will be the name of the game for the next few sessions, and long-term buying will be out..”
However, announcements of positive financial results for the second quarter of this year could be a new boost to move the index in the green.
Of the 33 stocks traded on DFM, 31 went down, one went up, and one remained unchanged. Of the 36 stocks traded on ADX, 29 declined, five advanced, and two remained flat.