Dubai shares have taken a dive as concerns over major construction firm Arabtec intensify, with the benchmark index heading potentially towards its biggest fall since 2008 after an intraday low of more than eight per cent.
The DFM General Index was down more than eight per cent at pixel time, 1.35pm local time, with stocks giving up early session gains.
The uncertainty surrounding one of the Middle East's largest construction companies, Arabtec Holdings, has sent stocks tumbling as the company confirmed it had imposed staff cuts, following the departure of Chief Executive Officer Hasan Ismaik last week.
The builder, whose stocks make up six per cent of the index, posted a statement on Dubai's stock market site this morning denying media reports that hundreds of employees, including high-ranking executives, had been dismissed.
Instead the company said it had laid off a limited number of people. Investors are also concerned about what will happen to Ismaik's 28.5 per cent stake in the company.
Speaking to Bloomberg, chief investment officer of Dubai-based Al Zarooni Group Wadah Al Taha called the confusion in the market "Arabtec fever".
“It’s contagious and affecting every single share in the market,” he said.
Arabtec shares had risen 250 per cent this year until its early May peak, which marked the end of the largest bull market since 2005. Dubai is entering what is known as 'bear market' yesterday, a market condition when prices of securities are falling and investors anticipate more losses as pessimism grows, after falling 20 per cent from a peak in May.
The emirate has been riding a housing boom, which many had warned could go the same way as the 2008-09 real estate crash.
Earlier this month the United Arab Emirates central bank said that there were signs the property market is overheating.