Dubai remains vulnerable as Arabtec confirms layoffs
Dubai, June 24, 2014
Dubai's bourse remains vulnerable to selling pressure on Tuesday after builder Arabtec Holding said it had laid off some staff, partly confirming reports that contributed to the stock's plunge in the last session.
Arabtec, the most heavily traded stock in Dubai, fell its daily limit of 10 per cent on Monday after sources told Reuters and other news agencies that it had laid off staff following last week's resignation of chief executive Hasan Ismaik. The stock has lost 48 per cent this month.
The firm said on Tuesday that it had laid off a "limited number" of staff in order to improve productivity and reduce costs, but denied a report which said the number was in the hundreds. Its statement did not comment directly on its business plans post-Ismaik, on how the company would be managed, or on what would happen to Ismaik's 28.85 per cent stake.
Arabtec shares last closed at Dh3.46; they have now dropped close to analysts' median price target for the stock, which is Dh3.36, according to Thomson Reuters data. But some of those estimates were made before the management turmoil at Arabtec, and analysts have said investors may choose to stay away from the stock until issues surrounding it are clarified.
Dubai's bourse tumbled 4.3 per cent on Monday and all markets in the Gulf declined except for Oman, which edged up 0.3 percent as Al Suwadi Power Co and Al Batinah Power Co surged on their post-IPO debuts.
Among other factors affecting the markets is the traditional pre-Ramadan lull, which has prompted some retail investors to book profits, and fighting in Iraq, which is a modest negative although data on Monday showed oil exports from the country have so far not been affected.-Reuters