The Abu Dhabi Securities Exchange (ADX) in Abu Dhabi. The ADX general index saw 94 million shares changing hands, the highest in three months. Image Credit: Ahmed Kutty/Gulf News Archives

Dubai: A potential merger led by Abu Dhabi Commercial Bank (ADCB) has fired up trading on the Abu Dhabi Securities Exchange (ADX).

About 40 million shares changed hands on the Union National Bank (UNB) counter on Wednesday, the highest volume since 2003, as traders expected UNB to benefit more from the potential merger with ADCB. UNB shares recovered from an intra-day low of Dh4.67, only to rise as much as Dh5. The stock closed Dh4.95, up 11.74 per cent.

In contrast, about 8 million shares changed hands in ADCB, whose shares closed 4.62 per cent lower at Dh7.63.

 A 3 per cent is definitely a surprise. There is weakness in the market due to increased pressure from emerging markets. There are chances of recovery but one can’t put a time-frame to it.”

 - Mohammad Shabbir | Saudi Kuwaiti Finance House fund manager


“We expect ADCB to offer 1:1.2x for UNB, which means ADCB has to cough up significant premium to UNB, which is currently trading at 0.6 times 2018 book. Over the next couple of days, we expect to see UNB spiking up significantly, and closing the valuation gap with ADCB,” said Aarthi Chandrasekaran, vice president at Shuaa.

The ADX general index saw 94 million shares changing hands, the highest in three months. The ADX index closed 1.12 per cent lower at 4,927.92 due to pressure from emerging market amid looming deadline in the US-China trade conflict. The MSCI emerging market index closed 1.48 per cent lower at 1,024.76.

Bearish outlook

In Dubai, the general index, which has been an underperformer in the Gulf region, closed 0.66 per cent lower to be at 2,818.44.

“Broadly speaking, the big-picture technical outlook remains firmly bearish and any recovery shall draw sellers at well-defined resistance levels,” Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities, said.

The Dubai index has witnessed disappointing performance so far in the year. The index has shed 16 per cent so far in the year, compared to 12 per cent gains in Abu Dhabi Securities Exchange general index.

Gulf Finance House closed 2.94 per cent higher at Dh1.40. “GFH is witnessing renewed buying and may recover towards the previous high of Dh1.50 in the coming few sessions,” Prakash said. Emaar Properties closed 1.77 per cent lower at Dh5.

Saudi index tumbles

Saudi stock market index nose-dived as traders sought to sell amid worries in emerging markets.

“A 3 per cent is a definitely a surprise. There is weakness in the market due to increased pressure from emerging market. There are chances of recovery but one can’t put a time-frame to it,” said Mohammad Shabbir, fund manager with Saudi Kuwaiti Finance House based in Riyadh.

Saudi Arabia’s Tadawul index closed more than 3 per cent lower at 7,719.10. Weakness was seen in all sectors with energy index losing 3.4 per cent.