Dubai: First Abu Dhabi Bank (FAB) saw renewed interest on Wednesday due to bargain buying, betting on further bullishness, while Abu Dhabi Commercial Bank recovered partly from their lows.
FAB shares closed 0.63 per cent higher at Dh16.10, while ADCB closed 1.82 per cent lower at Dh9.70, after hitting a low of Dh9.55.
“Since the overall trend in banking stocks is still bullish, traders on the sidelines re-enter on any corrective bounce. The same was seen today in FAB and ADCB,” said an analyst who did not wish to be named. The Abu Dhabi index closed 0.01 per cent lower at 5,258.32. ADCB declined in the previous session on index related activity, a day before the delisting of shares of Union National Bank, a merged entity.
“Investors have been securing gains throughout ADCB’s rally ever since the merger was announced and therefore booking profits now is completely normal given that proposed synergies have not yet been secured just like when FAB was created. Investors followed a story and now they will wait again to follow results when there are any,” Essam Kassabieh, Senior Financial Analyst, Menacorp said. The Abu Dhabi index has been outperforming in the region due to massive inflows seen in the banking sector in recent months as traders bet on synergies derived from mergers. FAB shares have gained 36 per cent in the past 1 year, while ADCB has gained 44 per cent in the same time period.
“Given ADCB’s new market cap and given the assumption that it will be assigned a greater weight in MSCI index at a later stage, the stock could attract investors before it produces tangible results as a result of the merger,” Kassabieh added.
“Dubai based banks are looking more attractive given that aside from Emirates NBD, none have made a market move to attract a rally and all are well below AD banks in terms of market performance,” Kassabieh said. Emirates NBD shares have gained only 16 per cent in the past one year, while Dubai Islamic Bank has gained 13 per cent in the same time period, underperforming banks in Abu Dhabi.
In trade on Wednesday, small stocks such as Emaar Malls, Shuaa, Deyaar, Gulf Navigation witnessed buying. Shuaa Capital ended more than 5 per cent at Dh0.99. Emaar Malls closed 1.15 per cent higher at Dh1.76. Emaar Properties fell after the stock went ex-dividend on Wednesday.
Emaar Properties shares ended 3.33 per cent lower at Dh4.64. Elsewhere in the region, Saudi Tadauwl index closed 0.40 per cent higher at 9,341.10.