Dubai Stocks Drop Most Since July on Arabtec Stake-Sale ConcernSarmad Khan
Dubai shares fell the most in more than seven weeks as Arabtec Holding Co. slid on speculation its largest shareholder will cut his stake and as investors raised cash before the Emaar Malls Group LLC initial public offering.
The DFM General Index declined 3.4 percent to 4,912.14 at the close in the emirate, the biggest drop since July 20 and the largest decline today among more than 90 gauges tracked globally by Bloomberg. Arabtec, the biggest publicly traded construction company in the United Arab Emirates, plunged 9.2 percent on volume 1.6 times the three-month daily average. Emaar Properties PJSC fell 2.7 percent.
Arabtec was at the center of a selloff in June that wiped more than 20 percent off the value of the benchmark index, triggered by senior management changes and investor concern the company may be losing Abu Dhabi-government backing. Former Chief Executive Officer Hasan Ismaik, who owns about 28 percent of the company, said last month he rejected an offer from Aabar Investments PJSC to buy part of his holding.
“There are rumors that he is going to offload his Arabtec stake in the market,” Nabil Rantisi, managing director of Mena Corp. Financial Services, said by phone today from Dubai. “People were afraid that he would start dumping and people got panicked and started to sell.”
Dubai-based Arabtec fell to 4.45 dirhams, the weakest close since Aug. 24. Emaar, which is selling at least 15 percent of its malls unit next week, decreased for a second day to 10.95 dirhams, the lowest in almost two weeks.
The developer of the world’s tallest tower will open the IPO for subscription on Sept. 14 and shares of the unit will start trading in Dubai on Oct. 2, according to a statement on the bourse’s website this week.
“A lot of liquidity is leaving the market” as some investors raised funds before the Emaar Malls share sale, according to Ahmed Shehada, the Abu Dhabi-based head of advisory and institutions at NBAD Securities LLC. “It’s retail investors selling across the board.”
Emaar will allocate about 5.3 billion dirhams ($1.4 billion) of proceeds from the sale to pay dividends, the developer said last month. At least 10 percent of the shares will be allotted to Emaar shareholders as of Sept. 10.