Dubai's index retreated for a third straight session on Wednesday, weighed down by builder Arabtec which fell after the regulator imposed a six-month trading ban on its chief executive. Arabtec dropped 2.5 percent, and the company's chief executive Riad Kamal said his suspension from trading in UAE markets was due to his oversight in selling shares prior to the announcement of projects.
"Obviously we will see some short-term impact, as there is no transparency about the issue at this point," said Robert McKinnon, ASAS Capital chief investment officer. "We still don't know if this will have any impact on Arabtec. I don't think it's a major issue as, in that case, there would have been a significant penalty." Dubai's index closed 0.7 percent lower. It was the worst performing Gulf Arab benchmark in 2010, dropping 9.6 percent, with volumes falling to a six-year low in 2010.
"Dubai saw some selling pressure as global markets were down but the Arabtec news added to the decline," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments. Trading volumes in the UAE markets are still low, making recovery difficult for the bourses, he said.
Heavyweight Emaar Properties fell 1.1 percent and Union Properties slipped 2.1 percent. Abu Dhabi's index advanced 0.3 percent. In Kuwait, banking stocks led a rally, helping the index close at a near eight-month high. Commercial Bank of Kuwait gained 2.2 percent, Kuwait Finance House added 1.6 percent.
"Banks are doing well as it's the earnings seasons and there is a lot of dividend speculation," said a Kuwaiti trader who did not want to be named. "Local investors have stepped in and are backing banks, which is a good sign." The index ended up 0.4 percent at its highest close since November 8.
Egypt's benchmark also surged to a fresh eight-month high, led by Mobinil after the company said it was paying a higher-than-expected dividend for the first nine months of 2010. The index advanced 0.1 percent, as mobile operator Mobinil jumped 3.9 percent. "It's a very big dividend. Nobody expected it," said Hisham Metwalli of Arab Finance Brokerage.
Orascom Telecom gained 0.5 percent after it announced it has completed the sale of its 50 percent stake in its Tunisian subsidiary to Qatar's Qtel. Real estate shares fell, with Palm Hills losing 0.8 percent and Egyptian Resorts falling 1.9 percent. Egypt's cabinet on Tuesday approved the outlines of a draft law that would create a body to handle the distribution of all state land.
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