Arabtec’s shares extended gains for a fourth consecutive day on Wednesday morning, opening up 6 per cent, even as the stock was downgraded to sell by EFG Hermes.
EFG said that this week’s rally in Arabtec shares, which have increased in value by more than 50 per cent since the start of the week, was driven purely by rumours that former chief executive Hasan Ismaik will continue to accumulate stock, and was not backed by fundamentals.
Mr Ismaik exited Arabtec abruptly in July 2014, subsequently trimming his stake in the company to 11.81 per cent. Mr Ismaik’s decision to increase his stake to 11.91 per cent this week has fuelled a boom in the stock among local investors.
“With the exception of Arabtec and Drake & Scull International (DSI), Stocks within our MENA contractors’ coverage have underperformed their corresponding general index,” the bank said in a research note published Wednesday morning.
“We believe both [Arabtec and DSI] will follow suit, as the market over-excitement fades away, thus we have Sell ratings on both names.”
The Dubai Financial Market General Index opened up nearly 1.5 per cent before paring gains, trading virtually unchanged 45 minutes into the day.
In the capital the Abu Dhabi Securities Exchange General Index was trading around 0.2 per cent lower.
Follow The National’s Business section on Twitter