Dubai
Traders in Arabtec rights, who failed to book profits after Monday’s rally, were stuck with their positions after trading froze immediately after opening.
“There is nothing they [traders] can do. Unfortunately there is no coming out as it’s limit down,” said Marwan Shurrab, head of high net worth and retail equity brokerage, Al Ramz.
Arabatec rights opened at Dh0.081, down 10 per cent compared to previous close, on the second day of trading, when circuit breakers, pre-set limits to designed to curtain volatility in share prices, were in place.
“People pushed this up to unsustainable level because there was no limit yesterday. Today, however, people were restricted by limits. Therefore this became very much less interesting,” Sanyalaksna Manibhandu, director Research, National Bank of Abu Dhabi Securities.
The exchange has a cap of 10 per cent on the downside and 15 per cent on the upside.
On day 1 of trading, Arabtec rights jumped more than 2,000 per cent at one point with trading seen in more than 1 billion rights. There is no limit on share prices on the initial day of the trading.
“There was a lot of exaggerated interest on the first day, so there won’t be any interest for remaining days because it’s just too risky and because you are restricted because of the boundaries,” Manibhandu said.
Arabtec will issue rights of Dh1.5 billion to shareholders with Aabar Investments ready to subscribe to rights, as part of the restructuring plan to bail out the loss-making firm.
