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|06 March, 2019

Abu Dhabi’s 3-bank merger could dent Dubai’s stocks

The combined entity could lead to excluding three Dubai stocks from MSCI’s benchmarks

Image used for illustrative purpose. Traders monitor stock information at Dubai Financial Market, in Dubai, United Arab Emirates, June 5, 2017.

Image used for illustrative purpose. Traders monitor stock information at Dubai Financial Market, in Dubai, United Arab Emirates, June 5, 2017.

REUTERS/Stringer

Abu Dhabi — Mubasher: Abu Dhabi-based banks are projected to pile further pressure on Dubai’s already-hit equities.

The merger deal between Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB), set to be closed on 1 May, could attract up to $193 million from investors who track benchmarks compiled by MSCI Inc. and FTSE Russell, Bloomberg News reported on Wednesday, citing an equities strategist at EFG-Hermes Holding.

The combined entity, that will later take over a privately-owned Al Hilal Bank and will create a lender with around $114 billion in assets, could lead to excluding three Dubai stocks from MSCI’s benchmarks, Mohamad Al Hajj said in a report.

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Over the course of the previous year, investors’ abiding worries over Dubai’s real estate market have weighed on Emaar Development, Emaar Malls, and Damac Properties, the New York-based news agency noted, forecasting potential investor outflows for these stocks to total $194 million.

In the same vein, First Abu Dhabi Bank seeks to increase its foreign ownership limit to 40% from 25%.

If the UAE’s biggest lender takes this step before mid-April, there is a “very high likelihood” the three stocks could be delisted from MSCI’s indexes as soon as May, Al Hajj said.

Source: Mubasher

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