Dubai builder Arabtec looks likely to support the emirate’s bourse on Thursday after the company’s biggest shareholder said he was in talks to sell part of his stake at a price higher than the current market valuation.
Hasan Ismaik, who abruptly resigned as Arabtec’s chief executive in June, told Reuters on Wednesday he was in talks with Abu Dhabi state fund Aabar to sell part of his 27.9 per cent stake and wanted over Dhs5 per share. Aabar is Arabtec’s second-biggest shareholder with an 18.94 per cent stake.
Ismaik spoke after Arabtec shares jumped 13 per cent to Dhs4.79 over the past four trading days on speculation about a potential deal with Aabar. The stock is among the most heavily traded in Dubai and its fate is pivotal for the entire bourse, which climbed 0.2 per cent on Wednesday.
Investors hope a sale of a substantial part of Ismaik’s stake to Aabar would remove a potential overhang from the market and guarantee that the deep-pocketed fund would continue supporting Arabtec by steering lucrative business its way.
Another Dubai firm, port operator DP World, may also rise after posting a 26 per cent jump in net profit for the first half of the year. The company earned $332 million in the period while two analysts surveyed by Reuters had on average forecast a profit of $295 million.
Elsewhere in the region, passively managed foreign funds may pour about $100 million into Qatar’s bourse as soon as on Thursday as index compiler MSCI is due to increase the weightings of several local stocks in its emerging market index at the end of this month.
The buying, which is likely to focus on heavyweights Indistries Qatar and Qatar National Bank, could lift the stocks; passive funds’ buying pushed them up at the end of May, when Qatar first entered the index.
But the buying may also make the market vulnerable to a pull-back, especially if investors again become jittery over Qatar’s hosting of the 2022 soccer World Cup.
FIFA has said the results of an investigation into the decision to award the tournament to Qatar are likely to be delivered by the first week of September, following allegations of graft, which Qatar denies. Fund managers think Qatar remains very unlikely to lose the hosting rights, but the issue could cause concern in the market.
Among other markets, Saudi Arabia’s bourse looks bullish as it continues an uptrend triggered by regulators’ plans to open up the market to foreign investors in early 2015. Strong economic data from the United States has boosted Saudi petrochemicals in the past few days.
The global backdrop is neutral as Asian stocks moved little on Thursday morning.