Reuters/Dubai

Stock markets in the UAE continued to recover yesterday, outperforming an otherwise weak Gulf region, while Qatar took a short-term hit from a rebalancing of the FTSE frontier market index.

Dubai’s bourse was the Gulf’s top performer, adding 1.6% and moving, for the first time in more than three weeks, in the opposite direction from Arabtec, which edged down 0.9%.

Arabtec, which dropped 50% in the last two weeks, still dominated trading volume, swinging between positive and negative territory as investors digested the surprise resignation of its chief executive Hasan Ismaik on Wednesday.

While some were positive about Ismaik’s departure and temporary replacement with an executive close to Aabar Investments, a major shareholder, others still had reservations about the stock.

It remained unclear, in particular, what Ismaik plans to do with his stake in the company, which is 28.85%, making him the largest shareholder, said Julian Bruce, director of Western institutional equity sales at EFG Hermes.

Those concerns limited the stock’s upside, disappointing short-term investors.

“Daytraders who were expecting a good positive move could see that there wasn’t a great deal of momentum and they just cut their positions towards the end of the session,” Bruce said. After the close, Ismaik told Reuters that he would hold onto his stake. “I will keep it. I am an investor. I believe in the company, Arabtec has great potential.”

Other Dubai property-related stocks were strong, though. Emaar Properties jumped 4.5% while construction firm Drake and Scull surged 5.6% to an all-time high of 1.90 dirhams.

Shares in Drake and Scull started strengthening after the company said on Tuesday it planned to issue a 55mn dirham ($15mn) convertible bond to a strategic investor, which it did not name.

Abu Dhabi’s bourse rose 0.5%, largely on the back of Abu Dhabi Commercial Bank and National Bank of Abu Dhabi, which were up 2.6 and 1.0% respectively.

Shares in two local energy firms that have operations in Iraq’s Kurdistan region also rose after declining earlier this week in response to the military advances made by insurgents. Abu Dhabi National Energy Company was up 3.5% and Dana Gas gained 1.4%.

Egypt’s market slid 1.2%, dragged down by blue chips Global Telecom Holding and Commercial International Bank, which fell 2.4 and 1.5% respectively.

Unlike the oil-rich Gulf states, Egypt’s economy could suffer from a sustained rise in oil prices due to the fighting in Iraq, as it relies on imported energy and subsidises domestic fuel prices.

Elsewhere in the Gulf, Saudi Arabia’s index rose 0.1% to 9,648 points; Kuwait’s index edged down 0.4% to 6,940 points; Egypt’s index fell 1.2% to 8,340 points; Bahrain’s index slipped 0.3% to 1,435 points, while Oman’s measure rose 0.1% to 6,913 points.