UAE merger announcements spur stock markets

Shares in FGB and NBAD surged, though both declined to comment on the market movements.

Abu Dhabi equities led gains across the Arabian Gulf on Thursday as shares in FGB and NBAD surged.

Share prices soared at the two banks, which last month announced they were in merger talks, following the announcement on Wednesday of a merger between the sovereign investment companies Mubadala and Ipic.

Shares in FGB rose by 5 per cent to Dh12.60, their largest gain since the lender confirmed on June 19 merger talks with NBAD. NBAD shares ended the day 3.7 per cent higher at Dh9.66, their highest level since September.

Such moves in the banks’ share prices did not mean that a deal between the two lenders is imminent, said Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi.

“Such swings are expected as long as there’s a lack of clarity on the shape of a future deal,” he said. “The longer we wait for clarity, the more you’ll see volatility as speculators and short-term investors take positions on the names.”

FGB declined to comment. An NBAD spokesman said the bank does not comment on market movements.

The Abu Dhabi Securities Exchange General Index rose 1.8 per cent on an otherwise quiet day of trading, closing at 4,497.64. The index finished 5.8 per cent higher for June, its best month since February.

Banks were also among the lead gainers in Dubai. Mashreq Bank shares rose by 4.8 per cent, recovering ground after a 9 per cent drop on Wednesday, while Emirates NBD and DIB were among the other main gainers. Emaar Properties closed up 1.64 per cent at Dh6.20.

The Dubai Financial Market General Index finished the day up 1.2 per cent at 3,311.10. The index was down less than a 10th of 1 per cent for last month.

European markets were calm as post-Brexit anxieties continue to abate. The Euro Stoxx 50 was up 0.3 per cent in midafternoon trading, while the FTSE 100 was up 0.2 per cent. The pound continued to stabilise, having fallen 0.5 per cent in the afternoon.

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