FAB shares drag ADX to four-month low

Abu Dhabi’s stock market fell sharply to a four-month low on Thursday because of a slide in shares of First Abu Dhabi Bank, the UAE’s largest lender, just before MSCI doubled its weighting of the stock in its indexes.

The Abu Dhabi index lost 2.3 per cent to 4,770 points amid record volume in FAB, which slumped 3 per cent. A total of 57.9 million shares in the bank traded, by far the highest since its listing in April 2017.

MSCI decided on the weighting increase in its semi-annual index review in the middle part of November.

Arqaam Capital estimated the increase, which takes effect at the end of this week, would attract $524 million of passive funds into the stock.

The stock has performed well this year so many investors took the influx of passive funds into it as an opportunity to take profits, said Mohamad Al Hajj, head of regional equity strategy for EFG Hermes.

The company’s stock is still up 32.7 per cent year-to-date compared to an 8.5 per cent rise in the Abu Dhabi index.

Abu Dhabi National Hotels rose 3.2 per cent in thin volume after saying its deal to buy hotels from Dubai’s Emaar Properties was valued at 2.2 billion dirhams ($599 million). Emaar lost 2.2 per cent.

Middle East funds have become more defensive after November’s oil price plunge and now expect on balance to trim their equities exposure slightly while increasing their holdings of fixed income, a monthly Reuters poll showed on Thursday.

The poll of 13 leading regional fund managers, conducted over the past week, found 15 per cent now expect to raise equity allocations in the next three months and 23 per cent to reduce them, the survey found.

Saudi Arabia’s index rose 0.9 per cent to 7,703 points on Thursday, boosted by banks. Al Rajhi Bank rose 1.3 per cent while the largest lender, National Commercial Bank, climbed 3.1 per cent.

The Dubai index slid 0.6 per cent to 2,669 points, declining for a sixth straight day as real estate firms continued to sag. Damac Properties dropped 3.6 per cent.

Dubai Investments shed 2.2 per cent to a five-year low; the stock has been sliding after MSCI decided to move the stock to its UAE small cap index from its UAE standard index.