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

Abu Dhabi’s 3-bank merger to dent Dubai’s stocks
The combined entity could lead to excluding three Dubai stocks from MSCI’s benchmarks.
ADCB
ADCB
-0.48% 8.22 -0.04
UNB
UNB
0.00% 5.90 0.00

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.

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.