Dubai: Shares of First Abu Dhabi Bank, the UAE’s largest bank, jumped to its highest level in five years due to expectations of an increase in foreign ownership, helping the Abu Dhabi index.
FAB shares hit a high of Dh15.60, its highest since June 2014, before closing 1.76 per cent higher to be at Dh15. Trading volumes in FAB came in at 22 million shares, the highest since December 13, last year.
“The foreign ownership limit increase is good and saw the stock trade higher in the early hours of the session and it is in fact yet last week’s data revealed foreigners only 12 per cent,” Issam Kassabieh, Senior Financial Analyst — Research Department, Menacorp told Gulf News.
Last week, FAB posted a 10 per cent increase in 2018 net profit to Dh12 billion, and gave out more than expected dividend of 74 fils per share. The board of the bank will meet on February 25 and may approve of any change in foreign ownership.
“FAB can maintain being a major player and outperformer if it manages to meet the final promises it had made to investors especially now that we will hear more about the IT system integration; also their dividend policy should emerge now,” Kassabieh said.
The ADX index hit its highest level in four years due to buying in banks. The index rose to a high of 5,171.99, before closing 0.61 per cent higher at 5,075.69,
“Traders may look to hold long positions with stop loss now placed under the recent low at 4,910. The recovery may extend gains towards the previous high of 5,350 in the short term,” Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities, said in a note.
Other banks such as Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) have also been on an upward trajectory due to the news on merger.
ADCB has gained 32 per cent, while UNB has accumulated 48 per cent in value since the merger was announced on September 3. “Banking stocks are seen holding strong and may attract further accumulation,” Prakash said. ADCB closed 0.53 per cent lower at Dh9.30, while UNB closed flat at Dh5.2.
“For ADCB and UNB, the merger of course pushed the rally but I would expect a similar performance to that of FAB which means the first year post merger will be slow and then a sudden boost in stock price as profits are achieved due to achieving synergies,” Kassabieh said.
However this rally has been limited to a few banks, even real estate shares have been facing the brunt of a slowing demand.
Property stocks were hit again. Emaar Properties, Emaar Malls and Damac Properties fell 2-3.5 per cent. Emaar Properties closed 3.25 per cent lower at Dh4.17.
Emaar Malls closed 4.46 per cent lower at Dh1.50. Damac Properties closed 2.29 per cent lower at Dh1.28. The Dubai index has been facing selling due to resistance at key technical point, which was at 50-day moving average at 2,560. The Dubai Financial Market general index closed 1 per cent lower at 2,540.25.