Abu Dhabi ral­lies on bank merger spec­u­la­tion; Saudi, Egypt re­bound MIDEAST STOCK MAR­KETS

Kuwait Times - - BUSINESS -

DUBAI: Abu Dhabi bank shares surged yes­ter­day be­cause of re­newed spec­u­la­tion that the govern­ment might merge more banks as part of an ef­fi­ciency drive, while other re­gional mar­kets re­bounded, en­cour­aged by strong global bourses and oil prices. The Abu Dhabi in­dex jumped 2.6 per­cent, its largest sin­gle-day gain since June, but trad­ing vol­ume con­tin­ued to de­cline from a seven-month peak hit ear­lier this month.

Quot­ing un­named sources, Bloomberg re­ported Abu Dhabi was con­sid­er­ing more fi­nan­cial sec­tor merg­ers after First Gulf Bank and Na­tional Bank of Abu Dhabi an­nounced ear­lier this year that they planned to merge in the first quar­ter next year. FGB shares closed 2.6 per­cent higher and NBAD shares added 1.5 per­cent. Union Na­tional Bank surged 12.3 per­cent and Abu Dhabi Com­mer­cial Bank jumped 5.8 per­cent on spec­u­la­tion they might form the next merger. Of­fi­cials at the banks and in the govern­ment were not avail­able to comment, though sev­eral bankers fa­mil­iar with the in­dus­try told Reuters that formal talks were not un­der way and the idea of any merger was still in very pre­lim­i­nary stages.

A UNB-ADCB merger would cre­ate the United Arab Emi­rates’ third big­gest bank and “of­fer a bet­ter foot­ing for ADCB to com­pete with the big­ger play­ers as un­der­writ­ing ca­pac­ity in­creases sig­nif­i­cantly,” Arqaam Cap­i­tal said in a note. Abu Dhabi Is­lamic Bank climbed 4.7 per­cent after Bloomberg said it could be merged with Al Hi­lal Bank. Bank of­fi­cials could not be reached for comment and Bloomberg said it was pos­si­ble that none of the po­ten­tial merg­ers would pro­ceed. Blue chips led Dubai’s main stock in­dex 2.1 per­cent higher with Emaar Prop­er­ties gain­ing 2.8 per­cent and Dubai Is­lamic Bank adding 2.4 per­cent.

Saudi Ara­bia’s in­dex re­bounded 2.4 per­cent to 6,648 points, 55 points be­low tech­ni­cal re­sis­tance on its July peak. Ninety-five per­cent of traded shares ad­vanced. All but one petro­chem­i­cal pro­ducer rose with Saudi Ba­sic In­dus­tries adding 2.1 per­cent as Brent oil fu­tures traded over $46 a bar­rel.

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