Analysts said uncertainty over proposed acquisition of construction firm Arabtec by Abu Dhabi investment fund Aabar will also keep investors sidelined. The Dh6.4 billion deal needs approval of at least three-quarters of Arabtec shareholders at an extraordinary general meeting likely to be held in early February.
Dubai Financial Market and Abu Dhabi Securities Exchange remained bearish this week as property sector remained under pressure in subdued trading. Investors concern over corporate results overshadowed a possible bounce from bullish global markets and steady oil prices. The broader trend especially in property stocks remained negative as investors kept a close eye on the possible Arabtec-Aabar deal.
Dubai Financial Market’s General Index declined 129.77 points, or 7.06 per cent, this week to 1,707.37 points. It broke psychological barrier of 1,800 points on Tueday due to negative sentiment prevailed over Arabtec-Aabar deal. The equities are likely to stay bearish next week and the Dubai benchmark index may breach 1,700-point barrier on selling pressure in property and banking sectors shares.
In the property sector, Arabtec shares hit the worst in line with the analysts’ expectation.The company’s shares lost 16.6 per cent this week over the proposed deal with Aabar Investments amid concern over minority shareholders’ interests. The deal, seen as negative to the company’s minority stakeholders, weighed on the market throughout the week.
“The deal is very good for Aabar and Arabtec, but it remains to be seen how good it will be for minority shareholders,” Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading, told Khaleej Times.
“The Arabtec-Aabar deal is clearly going to dominate the market for this week and possibly next week also until we start to see full-year results hit the tape,” Wakeman said.
Credit Suisse analyst Ahmed Badr said that Arabtec can also utilise the cash injection from Abu Dhabi in international expansion.
“A strong cash position will help secure funding from banks for large projects across the region, give confidence to acquire other regional contractors to secure a footprint in markets such as Libya, Saudi Arabia and possibly Algeria,” he said.
Shares in Emaar Properties, Union Properties and Deyaar also kept under pressure and lost significantly this week. Emaar Properties declined 13.08 per cent to Dh3.52 from Dh4.05 in previous week. Union Properties and Deyaar also fell 10.81 per cent and 8.33 per cent, respectively.
In the banking sector, Dubai Islamic Bank and Emirates NBD closed in negative columns as they lost 5.58 per cent and 5.54 per cent, respectively.
Gulf Finance House gained 10.19 per cent and closed at Dh1.19 last week.
In telecom sector, du fell three per cent and finished the week at Dh2.9 per share. Gulf Navigation Holding led the decline in transport sector and fell 6.56 per cent to Dh0.57.
The company is expected to release full-year earnings at the end of the month and earnings will be lower than in 2008. Abu Dhabi Securities Exchange also closed the week in negative columns. It fell 71.3 points, or 2.56 per cent, to 2,704.20 points.
The benchmark index may slip below 2,700 points level next week as investor are likely to take position after the announcements of corporate results due late this month.
According to data released by the Dubai Financial Market, foreign investors sold a net 233.3 million worth of shares last week.
DFM said in a statement on Thursday that the value of shares bought by foreign investors, or non-UAE nationals, during the week ended on January 14, reached Dh990.5 million comprising 43.7 per cent of the total value of stocks traded during the period.
The value of stocks sold by foreign investors during the same period reached Dh1.214 billion comprising 53.6 per cent of the total value of stocks traded during the period.
The value of stocks bought by institutional investors during last week reached Dh417.1 million comprising 18.4 per cent of the total value of stocks traded during the period.
The value of stocks sold by institutional investors during the period reached Dh662.7 million which constitutes 29.3 per cent of the total value of stocks traded during the period.
Net institutional investment on the market reached Dh245.6 million during the period, as aggregate sell.
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Local business2 months ago