Arabtec surges a seventh day amid contract bets

Arabtec Holding PJSC climbed for a seventh day, with the stock comprising more than half the value of shares traded in Dubai, on speculation the company may gain from infrastructure spending in the Middle East.

The United Arab Emirates’ biggest construction company surged as much as 11 per cent to Dh2.88 before closing at Dh2.7 at 2pm in Dubai, the highest since October 2009. The value of Arabtec shares traded was Dh259 million ($70.5m) compared with Dh403 million traded in Dubai and Dh69m in Abu Dhabi. Dubai’s benchmark index fell 0.2 per cent.

“It would be quite improbable for Arabtec to be trading the volumes it’s trading and exhibiting the price behaviour it has for several weeks without anything of strategic importance as the catalyst,” said Dubai-based Ibrahim Masood, who helps manage about $400m at Mashreqbank PSC. “There could be some big news on the business side, new business or fund flows on existing contracts. It could also be something less likely in terms of shareholding change.”

The stock has soared 70 per cent this year, with the trading volume at the highest today since March. Arabtec’s 14-day relative strength index rose above 70 on January 24 and reached 93.6 today. A reading above 70 indicates to some investors that the stock is likely to retreat.

Chief Financial Officer Ziad Makhzoumi declined to comment on the stock movement when contacted by Bloomberg News today.

Arabtec said in November the value of a contract it won in Saudi Arabia may rise to 1.5 billion riyals ($400m) as it expands in the biggest Arab market. The company last month won a 25-month contract valued at Dh561m to expand Dubai International Airport. One of its units got Dh256m of contracts in Abu Dhabi last week.

The company may report a 60 per cent drop in fourth-quarter profit to Dh22m, according to the median estimate of three analysts compiled by Bloomberg.