Arabtec tumbles on dilution worries

Shares in Dubai's Arabtec tumbled on Thursday to a six-week low on fears of a significant shares dilution after company plans of raising $1.8 billion in capital. Gulf markets were mixed, while Egypt's measure extended losses.

Arabtec will issue 3.2 billion shares at Dh1.5 per share, a near 50 percent discount to its current market price. The capital hike amounts to a more than 50 percent increase in its market capitalisation.

Its shares slumped 9.8 percent to Dh2.67, its lowest close since January 16. Trading was thin as the stock hit its maximum permitted daily decline early in the day - allowing no further sell orders to be processed.

"Potential support of the 200 daily exponential moving average is around 2.63 dirhams, which coordinates nicely with the 50 percent retracement at 2.625 of the uptrend begun at the beginning of this year," said Bruce Powers, a technical analyst and corporate advisor at Orpheus Capital.

"Given the significant move down today it wouldn't be surprising to see Arabtec drop below this potential support zone."

The contractor also replaced its chief executive as part of a shake-up driven by Abu Dhabi state investment fund Aabar, its largest shareholder, that is tightening its grip on the firm.

On Nasdaq Dubai, shares of Depa surged 11.4 percent after Cario-based EFG-Hermes said Arabtec is likely to use funds from the capital hike to take over the interiors contracting firm.

Arabtec, which acquired a 23.4 percent stake in Depa in Nov last year, will purchase the remaining 465 million shares in Depa that it does not currently own, analysts Jan Pawel Hasman and Shaza El Kady said in the note.

Dubai's benchmark shed 0.6 percent, continuing its sideways trading as it struggles to break through the 2,000 key psychological level.

Elsewhere, Cairo's measure fell 0.5 percent, down for its fifth consecutive losing session as weak earnings weighed on sentiment already downbeat on political concerns ahead of parliamentary elections.

Ezz Steel slipped 0.8 percent after the country's largest steel producer swung to a loss in the third quarter.

Egypt Kuwait Holding fell 4.2 percent, extending declines after the company reported a 47 percent drop in 2012 profit from a year ago.

Meanwhile, Kuwait measure climbed 0.3 percent to its highest close since May 2012.

Kuwait is up 8.9 percent year-to-date but recovering from an eight year trough it hit in November last year.

"We continue to be somewhat optimistic for the coming period of time in light of two primary factors - the anticipated favorable announcements and financial disclosures for many of the listed companies that have not yet announced and more importantly for the long over-due government mega projects announcements," said Fouad Darwish, head of brokerage at Global Investment House.

Hopes of progress on development spending are driving optimism in the market amid a benign political backdrop. The Kuwaiti opposition boycotted the last elections and so cabinet members are seen as pro-government. Investors have been waiting for development projects to be announced and a fraction of these are beginning to trickle through.

Kuwait said on Thursday it plans to choose a winning bid in the first quarter of this year for a 900 million dinars ($3.2 billion) new airport, a key project in the country's economic development plan.

THURSDAY'S HIGHLIGHTS

DUBAI: The index slipped 0.6 percent to 1,927 points.

ABU DHABI: The index declined 0.4 percent to 3,045 points.

EGYPT: The index retreated 0.5 percent to 5,489 points.

QATAR: The index gained 0.4 percent to 8,529 points.

KUWAIT: The index climbed 0.3 percent to 6,463 points.

OMAN: The index slipped 0.1 percent to 5,976 points.

BAHRAIN: The index declined 0.7 percent at 1,090 points.

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