UAE stock market surges on Arabtec hopes
Dubai, July 2, 2014
Dubai builder Arabtec's shares soared on Wednesday (July 2) ahead of the company's first news conference since last month's management reshuffle, helping markets in the UAE rally strongly for a second day.
Dubai's main index jumped 7.9 per cent, its biggest daily rise since last September, while Arabtec surged its 15 per cent daily limit, recovering further from a slump that at one stage wiped out more than two-thirds of the stock's value.
Investors hoped Arabtec's news conference, held just after the market closed, would clarify its strategy and its relationship to major shareholder Aabar Investments, and address the fate of a 28.85 per cent stake owned by former chief executive Hasan Ismaik, who resigned last month.
Market players said that in particular, there were rumours that a government-related entity might buy the stake. "The market is basically pre-empting that," said Shakeel Sarwar, head of asset management at Securities & Investment Co in Bahrain.
But while Arabtec reassured investors after the market closed by saying it retained the support of Aabar, and that all its projects were on track, the firm's chairman declined to comment on Ismaik's stake. So all uncertainty has not been cleared up.
Arabtec's jump supported a wider recovery in both UAE markets. Several other Dubai stocks went limit-up, including most heavily traded counter Union Properties, which on Tuesday forecast a fivefold increase in profit for the first half of this year.
Abu Dhabi's index jumped five per cent, its biggest gain in a month. Blue chips National Bank of Abu Dhabi and First Gulf Bank surged 6.5 and 6.9 per cent respectively, while Aldar Properties soared 10.7 per cent.
Qatar's market also continued its rally, rising 2.1 per cent. Islamic lenders were the main supports: Qatar Islamic Bank surged 7.1 per cent and Masraf Al Rayan jumped three per cent.
Qatari companies are usually among the first ones in the Gulf to report quarterly earnings and will begin publishing them next week, so some investors are taking positions in the market ahead of that, market players say.
Kuwait's market rose 1.1 per cent after a series of positive news items. Bloomberg reported on Tuesday that private equity firms KKR & Co LP and TPG Capital were among the groups looking to buy a majority stake in food retailer Kuwait Food Co SAK.
The report said at least six groups were considering bidding for the stake held by the Kuwait-based billionaire al-Kharafi family. Shares in Kuwait Food jumped 3.5 per cent.
"This company is part of a huge group - the sale of one for a good price will translate into profits for all the others," said Fouad Abdulrahman Alhadlaq, deputy general manager at Al Dar Asset Management in Kuwait.
Also, rating agency Moody's said on Wednesday that its outlook for Kuwait's banking system remained stable and that it expected local banks' profitability to recover.
Egypt's bourse, on the other hand, slipped 0.2 per cent after President Abdel Fattah Al-Sisi approved a law on Tuesday imposing a new 10 per cent tax on capital gains and stock dividends in an attempt to shore up state finances.
The tax signed into law by Sisi applies to dividends and capital gains made from trading stocks on the Egyptian stock market as well as unlisted companies.
"We already took a hit six weeks ago when it was on the table, but a spontaneous psychological sell-off is taking place," said Mohamed Radwan, director of international sales at Pharos Securities in Cairo.
Another negative factor, he said, was a court ruling in favour of the state tax authority which had accused billionaire tycoon Nassef Sawiris of tax evasion. The ruling was immediately suspended on appeal.
"It's not being welcomed in the investment community," Radwan said. - Reuters