Stock DFM Dubai market
Investors will be keeping close watch on pandemic created infections for their next moves. Defensive stocks should be having a field day. Image Credit: Ahmed Ramzan/Gulf News

The DFM ended the last trading session of the week higher by 1.02 per cent in spite of a decline for its market cap leader, Emirates NBD. The gains were powered by DFM’s second largest constituent, Dubai Islamic Bank, which rose 3.13 per cent.

ADX closed the week higher by 0.11 per cent.

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Ithmaar Holding was up 14.78 per cent for the day, making it the biggest gainer. The rally was powered by reports that Bank of Bahrain and Kuwait (BBK) and Ithmaar Holding have entered into an initial understanding to explore the prospect of BBK’s potential acquisition of Ithmaar Bank’s Bahrain operations. The acquisition might include specific assets of IB capital.

Both Ithmaar Bank and IB Capital are subsidiaries of Ithmaar Holding and the asset sale has helped the shares rally 40 per cent from the beginning of August.

Mega boost

ADNOC Distribution shares gained 5.57 per cent after the parent company concluded a $2.7 billion deal with Apollo Global Management to sell a 49 per cent stake in Abu Dhabi Property Leasing Holding Co., an ADNOC unit. The company has seen strong interest from global investors interested in high quality infrastructure projects.

DXB Entertainment recovered 16.67 per cent through last month, boosted by a rise in the number of local visitors to its theme parks. It had reduced operating costs by nearly half to Dh150 million in the first-half from Dh300 million in the first six months of 2019.

Julphar shares rose 11.86 per cent, and this could be due to rise in demand for drugs as the GCC is seeing a second wave of coronavirus infections. This is not exactly a great sign for other companies.

Traditionally, winter has always been associated with the onset of flu season. Going forward, the progression of disease will be a big factor in how the equity markets will move. A second wave might not be as impactful as the first one in economic terms, but still it can diminish the consumer confidence.

A sad saga

Drake & Scull International confirmed Munir Mansour as its new CEO. The company had reported profits of Dh262 million on revenues of Dh681 million for 2019. Total losses had been as high as Dh4.93 billion at one point.

Over the course of last 18 months, there have been at least five management rejigs at the top. Since 2016-17, DSI had been scaling down operations as it tries to get rid of non-performing projects and pare expenses.

The firm had also appointed a number of debt advisory firms in order to get things back to normal. The appointment of new CEO comes as DSI brought in Aaronite Partners for its government-backed debt restructuring. With total debt of approximately Dh4.8 billion, the work is cut out for the management.

The company’s share remains suspended from November 2018 owing to its non-submission of quarterly reports. The company has been on and off the local regulators’ radar for quite some time owing to lack of transparency and irregularities.

As such, any resumption of trading on secondary market would be a long drawn out affair.

- Vijay Valecha is Chief Investment Officer at Century Financial.