November 29, 2018 / 2:12 PM / 19 days ago

MIDEAST STOCKS-FAB drags down Abu Dhabi but banks boost Saudi

* Record volume in FAB before MSCI weighting boost

* Investors use entry of passive funds to take profits

* Dubai Investments hits five-year low

* Middle East funds more defensive on oil plunge – Reuters poll

* Banks strong in Qatar

By Shakeel Ahmad and Abinaya Vijayaraghavan

Nov 29 (Reuters) - Abu Dhabi’s stock market fell sharply to a four-month low on Thursday because of a slide in shares of First Abu Dhabi Bank, the United Arab Emirates’ largest lender, just before MSCI doubled its weighting of the stock in its indexes.

The Abu Dhabi index lost 2.3 percent amid record volume in FAB, which slumped 3 percent. A total of 57.9 million shares in the bank traded, by far the highest since its listing in April 2017.

MSCI decided on the weighting increase in its semi-annual index review in mid-November. Arqaam Capital estimated the increase, which takes effect at the end of this week, would attract $524 million of passive funds into the stock.

The stock has performed well this year so many investors took the influx of passive funds into it as an opportunity to take profits, said Mohamad Al Hajj, head of regional equity strategy for EFG Hermes.

The company’s stock is still up 32.7 percent year-to-date compared to an 8.5 percent rise in the Abu Dhabi index.

Abu Dhabi National Hotels rose 3.2 percent in very thin volume after saying its deal to buy hotels from Dubai’s Emaar Properties was valued at 2.2 billion dirhams ($599 million). Emaar lost 2.2 percent.

Middle East funds have become more defensive after November’s oil price plunge and now expect on balance to trim their equities exposure slightly while increasing their holdings of fixed income, a monthly Reuters poll showed on Thursday.

The poll of 13 leading regional fund managers, conducted over the past week, found 15 percent now expect to raise equity allocations in the next three months and 23 percent to reduce them, the survey found.

Saudi Arabia’s index rose 0.9 percent on Thursday, boosted by banks. Al Rajhi Bank rose 1.3 percent while the largest lender, National Commercial Bank, climbed 3.1 percent.

Ash Sharqiyah Development Co added 3.5 percent after appointing Abdulaziz Bin Abdulrahman al-Shamikh as its chairman.

The Dubai index slid 0.6 percent, declining for a sixth straight day as real estate firms continued to sag. DAMAC Properties dropped 3.6 percent.

Dubai Investments shed 2.2 percent to a five-year low; the stock has been sliding after MSCI decided to move the stock to its UAE small cap index from its UAE standard index.

Qatar’s index was up 0.3 percent with Qatar Commercial Bank adding 1.9 percent and Qatar National Bank gaining 0.8 percent. SAUDI ARABIA * The index rose 0.9 percent to 7,703 points DUBAI * The index fell 0.6 percent to 2,669 points ABU DHABI * The index fell 2.3 percent to 4,770 points QATAR * The index was up 0.3 percent at 10,365 points KUWAIT * The index was down 0.4 percent at 5,318 points EGYPT * The index was up 0.1 percent at 13,320 points BAHRAIN * The index was up 0.3 percent at 1,329 points OMAN * The index was up 0.4 percent at 4,412 points (Editing by Andrew Torchia and Jon Boyle)

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