First Abu Dhabi Bank (FAB) on Shaikh Zayed Road, Dubai. In the first quarter of 2018, FAB’s impairment charges reached Dh439 million, down 31 per cent over the Dh641 million in the same quarter of 2017. Image Credit: Clint Egbert/Gulf News

Dubai: Analysts expect a rotation from First Abu Dhabi Bank to other stocks as the counter gets more pricey. FAB has been one of the top performing stocks in the region, as investors opted to chase the bank after its merger and with their eyes on the possible cost benefits.

FAB shares have gained 27 per cent since the start of January, even though they ended slightly lower at Dh14.56 on Monday. As a result, valuations have soared. FAB shares were trading at 13.7 times PE multiple compared to a median of 7.86 times.

“The UAE markets are seeing some momentum. We expect some rotation from FAB to other banks, as the valuation differential has become too substantial,” Vrajesh Bhandari, fund manager at Al Mal Capital said. “Many other companies with exposure to trade and infrastructure shall come into focus going into the Expo.”

Dubai, however, has seen fewer winners compared to its counterparts in Abu Dhabi. Shares of Emaar Properties, Dubai Islamic Bank, and Emirates NBD have been lagging along with the gauge.

Elsewhere in the Gulf, the Tadawul index closed 0.13 per cent higher at 7,925.41. Alinma Bank closed 0.57 per cent higher at 21.18 Saudi riyals, Dar Alarkan Real Estate Development Co. was flat at 10.02 riyals. Al Mal Capital’s strategy in Saudi Arabia is to buy on dips.

“We believe the market is going to be well supported up until early next year given the Index inclusion catalyst. Deferral of Aramco is not a major factor in our view,” Bhandari added.

The Qatar exchange index closed 0.65 per cent lower at 9,799.83, while the Kuwait index was 0.82 per cent lower at 5,096.27. The Bahrain all-share index ended 0.17 per cent lower at 1,334.52.