By: Bedour El-Raie
Dubai – Mubasher: Arabtec Holding’s stock suffered market losses worth AED 462 million ($125.75 million) on the Dubai Financial Market (DFM) on Tuesday, bringing the company’s market value to AED 9.507 billion, against AED 9.968 billion by the end of Monday.
These losses followed news that the UAE construction company withdrew from the 1-million-unit project in Egypt, after it incurred losses during the first half-year period of 2015.
Egyptian newspapers reported Arabtec’s withdrawal from the Egyptian mega project after the company’s projects suffered a slowdown due its weak financial position.
Arabtec’s management is preparing to withdraw from the project as part of a new strategy that focuses on executing higher profitability projects such as luxury housing and skyscrapers to make up for its recent losses, Egyptian newspapers reported.
The DFM-listed stock plunged 4.63% to AED 2.060 on Monday, with turnover reaching AED 72.13 million and 33.87 million shares were traded.
The DFM suffered a strong wave of declines on Tuesday, bringing the index down by 2.53% to its lowest level since mid-April, while the real estate sector fell 3.12% after trading for AED 287.21 million.
Meanwhile, a wave of collective declines hit GCC markets on Tuesday due to growing global fears of a decline in the Chinese economy, a weakening Japanese economy and following the retreat of the New York Stock Exchange’s industrial index and its impact on the interest rate added to a sharp drop in oil prices.
An Egyptian newspaper previously reported that the Dubai-based construction giant was ready to implement the 1-million-unit project in the new cities in Greater Cairo only, after excluding cities in the Delta and Upper Egypt; however, the Egyptian housing ministry refused this suggestion.
Earlier this week, Arabtec Holding reported turning to losses in the first half of 2015 with AED 1.3 billion ($354 million) against a net profit of AED 265.34 million ($72.24 million) in H1-14. Net losses for Q2-15 stood at AED 996.4 million against a net profit of AED 113.5 million in the same period a year earlier.
In April, the Dubai developer said it received an approval from the Egyptian Cabinet to execute the first stage of the project which includes 100,000 units in El-Obour and Badr cities.
Last year, the UAE firm and the Egyptian government signed a deal to build 1 million units at a total expected cost of EGP 280 billion.
Translated by: Nada Adel Sobhi