190130 adb merger
Image Credit: Abdul Rahman/Gulf News

Dubai: Traded volume in Abu Dhabi Commercial Bank (ADCB) shares hit its highest level in five years in index related transactions ahead of the official merger with Union National Bank (UNB).

About 30 million shares changed hands during trading hours on the Abu Dhabi Securities Exchange, while another 53 million shares changed hands during the last 5 minutes of auction trade. The total of 83 million shares was the highest level since Feburay 2013. ADCB closed 1.20 per cent lower at Dh9.88.

“It seems ADCB’s roughly $200 million (Dh735 million) passive inflow was fully accommodated by buyers, mainly foreign, who had prepositioned themselves. And so, there was no increase in the stock price,” Vrajesh Bhandari, senior portfolio manager at Al Mal Capital told Gulf News.

The merger between ADCB, UNB and Al Hilal Bank would be effective from May 1, and on that day shareholders of Union National Bank will be issued new ADCB (Abu Dhabi Commercial Bank) shares. UNB shareholders will get 0.5966 new ADCB shares for every share held. Surge in traded volume of ADCB resulted in a 100 per cent jump in the total of the Abu Dhabi Securities Exchange. Traded volume jumped to 161 million shares on Tuesday compared to a 30-day average volume of 60 million shares. The Abu Dhabi Securities Exchange general index closed 1.4 per cent lower at 5,258.05.

Other banks such as First Abu Dhabi Bank and UNB fell in trade. FAB closed 2.44 per cent lower at Dh16. UNB closed 0.85 per cent lower at Dh5.85. In Dubai, Emirates NBD closed 0.42 per cent lower at Dh11.95. Dubai Islamic Bank ended flat at Dh5.17.

“Our view is investors need to be selective when it comes to banks and take in account growth expectations and asset quality. We see better value in Dubai-based lenders — Emirates NBD and Dubai Islamic Bank,” Bhandari said.

Dubai based lenders have underperformed compared to massive gains in Abu Dhabi Banks, which have benefited from the merger news. FAB has gained 35 per cent in the past one year, compared to 15 per cent gains in Emirates NBD.

In other stocks, Emaar Properties witnessed an auction trade of 4 million shares. Emaar Properties closed 2.13 per cent higher at Dh4.80.

“Emaar Properties is expected to gain momentum towards the immediate resistance at Dh4.91. A break over that resistance level may result in a recovery to Dh5.30 in short-term,” Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities said in a note. “Swing traders can buy at current market price with a stop loss below Dh4.69.”