Abu Dhabi stocks retreated the most in a month after three banks said they were unaware of plans for possible mergers, dashing investor optimism that competition in the emirate’s financial sector will ease.

Abu Dhabi’s ADX General Index fell 1.7 percent after Abu Dhabi Commercial Bank PJSC, Union National Bank PJSC and Abu Dhabi Islamic Bank PJSC made statements to the bourse about reports of potential combinations. The lenders were suspended briefly before sinking at least 0.8 percent. Saudi Arabia’s Tadawul All Share Index reversed gains of as much as 0.5 percent.

The shares of all three banks rallied last week on reports the government was considering more financial-institution mergers after combining National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC. The emirate is consolidating companies after the price of oil, one of its main sources of revenue, declined more than 40 percent in the past two years.

Abu Dhabi sits on about 6 percent of the world’s proven crude reserves, and is the richest of the seven sheikhdoms that make up the United Arab Emirates.

“The market was excited in the past few sessions about further consolidation in Abu Dhabi, which would mean less competition and stronger banks in the U.A.E., so investors are waiting for more clarity on that,” said Monsef Morsy, a financial stocks analyst at CI Capital in Cairo, Egypt. “If there are signs that the mergers won’t happen, the reaction will be negative, as we are seeing now.”

ADCB declined 2.7 percent, ADIB retreated 0.8 percent and UNB fell 5.2 percent. The ADX’s volume of trades was 340 million, double its five-day average.

Tadawul Drops

Dubai’s DFM General Index and Kuwait’s SE Price Index slipped 0.3 percent and 0.1 percent, respectively. Qatar’s QE Index and Bahrain’s BB All Share Index each added 0.1 percent. Oman’s MSM 30 Index climbed 0.5 percent.

The Tadawul fell 0.9 percent in Riyadh on Sunday, led by Saudi Telecom Co.’s 3.7 percent loss. Jabal Omar Development Co. and Banque Saudi Fransi declined 1.8 percent and 3.6 percent, respectively.

Israel Rises

Israeli stocks advanced for a fourth day, the longest winning streak in two months. The TA-25 Index added 0.4 percent led by Perrigo Co., which tracked gains in New York to climb 2.3 percent.

Africa-Israel Investments Ltd. plunged 23 percent, the most in seven years, after the debt-ridden real estate company received a purchase offer from Shayma Investments that includes the issuance of new shares.

The shekel depreciated 0.5 percent to 3.8857 per dollar on Friday, trading at the weakest level since July.

Source:
courtesy of BLOOMBERG

by Filipe Pacheco and Sharon Wrobel

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