Dubai index plunges most since August 2013 while Abu Dhabi suffers biggest drop since January 2011 as fall in Arabtec shares triggered a chain of margin calls that forced a broad sell-off.
Arabtec Holding Co. (ARTC)’s ambition to become one of the world’s largest construction companies is in doubt after managers behind the plans were said to have quit or been dismissed.
The resignation of Chief Executive Officer Hasan Ismaik last week was followed by the termination and resignation of hundreds of employees, according to people with knowledge of the situation. They include Chief Operating Officer Mark Andrews, Chief Information Officer Gordon Jack and Chief Risk Officer David Doyle, said the people, who asked not to be named because they’re not authorized to discuss the matter. Arabtec denied it let go of hundreds of staff, adding that it dismissed a “limited” number of people, according to a statement to Dubai’s bourse today.
“It seems the company’s aspirations to be one of the top 10 construction firms in the world by 2018 has now been discarded as part of the strategy,” Sanyalaksna Manibhandu, an analyst at NBAD Securities in Abu Dhabi, said by phone. “Arabtec will probably go back to what it was before Mr. Ismaik, a regional construction company.”
Under Ismaik’s 15-month leadership, Arabtec announced plans to expand into areas including oil and gas, infrastructure and power. The biggest publicly traded builder in the United Arab Emirates formed a joint venture with Samsung Engineering Co. to provide engineering, procurement and construction services to “large-scale multi-billion” projects in the Middle East and Africa.
The DFM index fell 6.68 per cent to 4,009.01 points. The index has dived around 8.7 per cent during intra trade and recovered slightly towards the close, hitting a high of 4,320.39 and a low of 3,923.17 points.
Property-related shares took a beating across both the bourses and forced Abu Dhabi’s index — ADX — to close 3.32 per cent down at 4,553.31 points, its biggest drop since January 2011.
Of the 35 companies traded in Abu Dhabi, three rose, 27 declined and five closed unchanged.
About 220.59 million shares worth Dh513.23 million were traded. Aldar was the active value leader while Eshraq was the active volume leader.