Abu Dhabi’s banking shares may trade lower on Monday as investors book profits on strong gains following details of a merger between two mega banks, while Egypt’s bourse may be supported by increased chances of further currency devaluation.
Major banking shares in Abu Dhabi were robust on Sunday after the boards of directors of First Gulf Bank and National Bank of Abu Dhabi approved a proposed merger of the banks through a share swap of 1.254 shares of NBAD per share of FGB, aiming to complete it in the first quarter of 2017.
NBAD jumped 4.0 percent, while FGB gained 2.0 percent.
Some of the exuberance however may give way to profit-taking as investors sell-off ahead of the Eid-al-Fitr and summer holidays.
In Dubai, the main index may slip as investors cash out of the small- and mid-tier stocks which soared the previous day.
“It is quite usual to see the speculative shares making the most noise before the holiday season due to lack of any other catalyst,” said a day trader in Dubai.
In Cairo, economists believe the probability of further currency devaluation in the current fiscal year has intensified.
The central bank governor Tarek Amer told local papers that since he took up his post in November his focus has been to address stagnation and stimulate the economy while targeting a flexible exchange rate that reflects supply and demand.
A devaluation will hurt the purchasing power of Egyptians and will hit return on investment in Egyptian pounds, but will attract tourism and cheapen exports.
On Sunday, those shares saw some buying interest and may continue to be in favour on Monday.
Saudi Arabia’s market is closed throughout this week for Eid-al-Fitr holidays.