September 4, 2018 / 8:28 AM / in a month

MIDEAST STOCKS-Abu Dhabi shares up, eyeing bank merger, U.S. trade disputes weigh elsewhere

DUBAI, Sept 4 (Reuters) - Abu Dhabi shares rose at the open on Tuesday after Abu Dhabi Commercial Bank (ADCB) said it was exploring potential merger talks with two other lenders, while regional markets were muted amid continued U.S. trade disputes with other countries.

ADCB on Monday said it was in early merger talks with Union National Bank (UNB) and Al Hilal Bank, which could potentially form a lender with $113 billion in assets.

“Investors are reacting to the positive news of the potential merger ADCB and UNB and possibly Al Hilal Bank,” said Tariq Qaqish, managing director of the asset-management division at Mena Corp. Financial Services in Dubai.

“The banking sector globally is moving towards digital, therefore closing branches, focusing on cost to income ratios is vital for banks to compete and able to generate higher returns on equity. The UAE is no different.”

ADCB stocks surged 12.8 percent to eight dirhams a share, the highest level since August 2015. Union National Bank jumped 14 percent to 4.4 dirhams, the highest level since March this year.

“The sector in the UAE is overbanked therefore mergers to create bigger entities with better synergy and efficiency is positive for Abu Dhabi,” Qaqish added.

The Abu Dhabi Securities Exchange General Index was up 1 percent at 4,989 points.

The Dubai Financial Market General Index was up 0.3 percent, led by real estate and logistics companies.

Damac Properties, the owner and operator of the only Trump-branded golf club in the Middle East, was up 1.5 percent.

Emaar Development, a unit of Dubai property firm Emaar Properties, was up 0.6 percent. Dubai-based courier Aramex was up 1.4 percent.

Middle East stock markets were mostly muted on concerns that trade disputes involving the United States could hurt the global economy.

“The unpredictability of the U.S. trade policies towards global trade partners is affecting investors’ appetite towards equity markets,” Qaqish said.

Elsewhere in the region, the Saudi Tadawul All-Share Index was up 0.3 percent, while Qatar’s benchmark was flat.

Reporting by Hadeel Al Sayegh, editing by Louise Heavens

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