News Column

UAE investors wait to see what will happen in Iraq, and in Arabtec

June 18, 2014

Andy Staples Editor UniversalCopy Desk

Dubai: Arabtec shares rose 1.9 per cent to Dh4.30 on Wednesday following the announcement that CEO and managing director Hassan Ismaik was stepping down.

Trading volumes on Wednesday were down in both Dubai and Abu Dhabi as turmoil in Iraq continued to depress both markets.

The Dubai Financial Market saw a total volume of 427 million trades worth a total of Dh1.3 billion. Abu Dhabi Securities Exchange saw 164 million trades worth Dh379 million.

The DFM index rose 0.6 per cent to 4,522.30. The Abu Dhabi index rose 0.68 per cent to 4,781.28.

Arabtec remained the main value driver for Dubai, with trades worth Dh704 million.

"The Arabtec uncertainty has affected the market negatively for the last 10 days, or two weeks," said Mohammad Ali Yasin, managing director of NBAD Securities. "We saw the announcement come with a better closing price. However ... investors are keen to know what kind of vision the new managing director has for the company will there be continuity or a change of direction? A lot of investors have connected Arabtec's vision for the future with the old managing director.

"But getting someone from Aabar may be a vote of confidence by Aabar."

"We need share prices to settle for a period of time. The credibility of the market has been hard over the past couple of weeks.

"So it's wait and see but it's a hopeful wait and see."

While the UAE markets had entered a consolidation phase before the problems in Iraq, the volumes on Wednesday were considerably lower than over the past few weeks. Yasin was confident that the turmoil was the cause.

"Over the past three sessions we have seen volumes drop consistently day to day. Even outside Arabtec the DFM has dropped. I think that's the events in Iraq, really. These are factors outside our hands. They affect sentiment, but they are out of hour hands.

"If tension recedes, we will see less volatility, calmer markets in general."

Yasin said there would be less pressure on the markets if the DFM stabilised around 4,800 points.

"It needs to go into a period of calmness and low volatility, and if that happens, that will give us stability," he said. "I think that will come with H1 and quarter one results in July. I don't see Ramadan as a factor."

The DFM was balanced, with 13 of the 28 securities traded advancing, 13 declining and two remaining unchanged. DP World, listed on Nasdaq Dubai, was the biggest gainer, rising 8.01 per cent to close at $18.60, making up some of the ground it lost on Tuesday.

In Abu Dhabi, half of the 30 securities traded advanced, with 8 declining and 7 static. Ras Al Khaimah White Cement was the biggest gainer, making 13.79 per cent to close at Dh1.65, though that was in single trade worth just Dh9,000. Ras Al Khaimah Cement Co made nearly as much 13.01 per cent to close at Dh1.39 in 21 trades worth a total of Dh1 million.

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Source: Gulf News (United Arab Emirates)

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