Dubaiâ€™s share index rose on Wednesday as builder Arabtec surged after getting approval from the securities regulator to increase its capital, while Saudi chemicals producer Tasnee gained on news it will sell a major business segment. Arabtec jumped by its 15 percent daily limit percent to 0.97 dirham, bouncing off its lowest closing level in five years on Tuesday.
The builder said it received initial approval from the stock market regulator for its recapitalisation programme, subject to completion of its 2016 financial audit and a final sign-off.
The construction company reported a wider fourth-quarter loss earlier this month and the board said it was seeking shareholder approval for a 1.5 billion dirham ($408.4 million) rights issue.
An institutional investor based in Dubai said the strong rebound in price is attributable to day-traders who want to turn a quick profit, but it lacks fundamental justification.
“Fundamentally, it would be hard to justify beyond a price of 0.70 dirham, and (that is) factoring in the support and weight of Aabar, who owns about 36 percent of Arabtec,” he added.
The positive mood spilled into other stocks, helping the main index rebound 2.4 percent to 3,646 points in above 10-day average daily volume. It was the largest single day gain since Dec. 12. Emaar Properties, the builder of the world’s tallest tower, added 2.8 percent.
Abu Dhabi’s index rose 0.7 percent on the back of a 4.7 percent rise in shares of Dana Gas. Earlier this week the commodities producer came under pressure after a downward revision to its net earnings for 2016.
Saudi’s National Industrialization (Tasnee) jumped its 10 percent daily limit in heavy trade after saying it entered into an agreement with American chemicals maker Tronox to sell its titanium dioxide business, Cristal, for $1.673 billion in cash and 37.6 million new shares in Tronox. Analysts at Riyadh-based NCB Capital said that despite the capital loss from the sale – the difference between the selling price and the book value of Cristal – which will be recorded in the income statement, they believe the deal will help Tasnee in the long run as it improves margins and the balance sheet.
The deal is expected to happen within 15 months and is subject to regulatory approvals.
Other petrochemical shares also rose as Brent futures rebounded overnight and were trading near $56.50 a barrel. Advanced Petrochemical added 4.9 percent. The main index closed 0.1 percent higher. Qatar’s index added 0.2 percent to 10,953 points, bouncing from a session low of 10,683 points. Real-estate developer Ezdan Holding Group was the top performer, adding 2.4 percent. Commercial Bank, however, dropped 4.3 percent after reporting a large fall in 2016 full-year net profit.
The bank made a net profit of 500.8 million riyals ($137.56 million) in 2016, down 64 percent from the 1.4 billion riyals it made in the prior year.
Egypt’s index succumbed to profit taking and fell 2.1 percent as the Egyptian pound steadied near a three-month peak against the U.S. dollar.
Foreign funds were net sellers of shares, bourse data showed. They have been selling in recent days as appreciation of the pound has made local stocks more expensive in dollar terms and offered currency gains.
Global Telecom Holding slumped 7.9 percent in heavy trade after the mobile phone operator was fined $60 million in a lawsuit over its previously owned Iraqi unit.
Analysts at Naeem Research said that although the amount is small relative to company’s size of around $2.5 billion, as of Tuesday’s close, it is expected to shave off around 10 percent from its cash balance, and the provision is expected to be reflected in fourth-quarter earnings, due to be announced on Feb. 28.