(MENAFN - Khaleej Times) Arabtec's stocks fell 10 per cent during trading on monday reaching its lowest level since march.
shares of the uae’s largest construction firm arabtec on monday tumbled to its lowest since march after the company fired hundreds of employees bloomberg reported citing people familiar with the matter.
the dubai contractor has laid off a significant number of employees in the wake of chief executive hasan ismaik’s departure last week sources said adding: “shohidul ahad-choudhury arabtec’s head of mergers and acquisitions and a former deutsche bank executive was among those dismissed.”
it is reported that large numbers of staff including at least two senior executives have departed the company since ismaik resigned. arabtec didn’t confirm the staff lay-off.
the contractor has plunged 48 per cent so far this month and 53 per cent from a record dh7.40 in may. abu dhabi state-run aabar investments cut its stake to 18.85 per cent as of june 11 from 21.57 per cent stoking speculation the builder was losing government backing.
investors are selling arabtec because there’s uncertainty surrounding its governance and ability to “execute their pipeline of projects effectively with so much internal strife” according to ramez merhi director of asset management at dubai-based al masah capital.
“this looks as if it could have been a fight for control of the company and aabar won.”
ismaik is still the single-largest shareholder in arabtec with an nearly 29 per cent stake. the former ceo said on june 18 that he would consider selling his shares in the company if he gets an offer from the government. arabtec board member mohamed al fahim was appointed acting ceo following ismaik’s departure.
“the company must be forced to come up with an announcement to ease tension among the investors mainly the small investors” wadah al taha chief investment officer of dubai-based al zarooni group said.
dfm hits 3-month low
dubai’s bourse on monday sank to its lowest level in more than three months with its plunge led by property stocks — especially arabtec as the largest listed construction company laid off a significant number of employees in the wake of former chief executive officer’s hasan ismaik’s departure last week.
the dfm general index dropped by 4.3 per cent to 4296 points the lowest close since march 19 and a second day falling. arabtec fell by nearly 10 per cent after dismissing staff including senior managers bloomberg reported citing sources.
property giant emaar properties which has the largest weighting on the benchmark index was the biggest decliner by index points retreating 4.9 per cent. emaar fell to dh8.80.
“there is confusion in the market and i call it ‘arabtec fever’” wadah al taha chief investment officer of dubai-based al zarooni group told bloomberg. “the sentiment is very weak and investors weren’t prepared for the situation getting so much worse” al taha said adding that in a worst case scenario the index could fall to 3800.
the dfm witnessed a total of 10686 trades generating 598 million shares volume and valuing dh1.47 billion.
overall 31 stocks attracted trades. twenty-six stocks declined and only four appreciated in terms of value. arabtec became the top trading volume contributor with 132 million shares followed by gulf finance house 81 million shares and union properties 75 million shares. the dfm soared this year amid a real estate recovery in the emirate before the uae’s central bank said on june 8 there are signs the property market is overheating.
“dubai’s gauge entered a bear market after it plunged 20 per cent since a peak in may. two of the regularly traded stocks in the 30-member benchmark gauge were trading above their 50-day moving average price... that’s the fewest since july 2012 and compares with a one-year peak of 23 in december” according to data compiled by bloomberg.
arabtec which has the fifth-highest weighting on dubai’s benchmark index has dropped 48 per cent in june. its shares tumbled to dh3.46 the lowest since march 17.