Qatari bourse index loses 58 points

June 12, 2014 - 12:00:00 am

Doha: Qatar Exchange index lost 58 points, or 0.45 percent, yesterday to close at 12,912.81 points from the previous closing of 12,970.81 points on Tuesday.

The volume of shares fell to 14,933,941 from Tuesday’s 17,897,406 and the value of shares decreased to QR659,920,804.10 from QR779,145,238.41 on Tuesday.

Among the top losers were Industries Qatar whose share was down 1.31 percent to QR181.20, Commercial Bank of Qatar  lost 1.07 percent to QR65.00, International Islamic Bank fell 1.06 percent to QR83.70 and Vodafone Qatar declined by 0.25 percent to QR20.20.

Meanwhile, Dubai’s market declined for a fourth straight day yesterday as Arabtec tumbled and the bourse said a major shareholder had reduced its stake in the construction firm.

The slide underlined how the Dubai bourse has become dominated by a few heavyweight stocks which have been swinging widely in response to frenzied trade by retail investors. The main index fell 0.6 percent.

Shares in Arabtec dropped 7.8 percent, dominating turnover.  Dubai Financial Market said in a statement after trading closed that Abu Dhabi state fund Aabar Investments had cut its stake Arabtec to 18.85 percent as of yesterday from 21.57 percent on June 8.

Some investors apparently got wind of the sales early this week, sparking a sell-off. The stock has plunged 30 percent in the last four sessions; a total of 455 million shares changed hands this week, while Aabar’s holdings decreased by only about 120 million shares.

Before its slump, Arabtec had more than tripled in value this year, and most analysts considered it overvalued. The stock is still up 127 percent year-to-date.

Aabar emerged as a major shareholder of Arabtec in 2012 and has since led a management shake-up at the company, awarding it with large contracts such as a Dh20bn ($5.5bn) deal to build 37 major buildings announced in February.

It was not immediately clear whether the recent decrease in its stake signalled any change in Aabar’s support of Arabtec, or whether its stake would drop further. But uncertainty about the stock, as well as suspicions that Aabar may have sold because it saw the market peaking, may continue to dampen the market.

Ali Adou, portfolio manager at The National Investor in Abu Dhabi, said the recent stake decrease did not necessarily signal that Aabar was changing its long-term support of Arabtec, but there was as yet little clarity.

Another factor behind Arabtec’s bull run this year was index compiler MSCI’s decision to include the company, along with 18 other stocks from the United Arab Emirates and Qatar, in its emerging market index at the end of May.

Local and foreign investors built up positions in those stocks ahead of the upgrade, driving them up, and started booking profits on a large scale this month.

Abu Dhabi’s bourse added 0.1 percent yesterday, ending a three-day losing streak, on the back of National Bank of Abu Dhabi, which gained 2.3 percent.

Egypt’s bourse, which had risked being dropped from MSCI’s emerging market benchmark, rose 1.7 percent after the index compiler said it was no longer considering such a move.  MSCI said the decision followed a substantial increase in the country’s foreign currency reserves.