Bloomberg News

Aldar Lifts Abu Dhabi Stocks on Merger Progress; Saudi Rallies

May 22, 2012

Abu Dhabi shares rose to a one-week high, led by Aldar Properties PJSC (ALDAR) and Sorouh Real Estate Co. (SOROUH), as the emirate’s biggest developers were said to be considering appointing advisers for a possible merger. Saudi shares rallied.

Aldar and Sorouh rose to the highest levels in two weeks. The stocks pushed the ADX Real Estate Index (ADRE) up 3.5 percent. The ADX General Index (ADSMI) gained 0.1 percent to 2,471.05, the highest since May 15, at the 2 p.m. close in Abu Dhabi. Saudi Arabia (SABIC)’s Tadawul All Share Index advanced 1.1 percent, the most in a month. Emerging-market stocks rose the most in eight weeks.

“Investors have interpreted the appointment of advisers as positive as it shows the merger talks are progressing well,” said Waleed Al Khateeb, the senior finance manager at Daman Securities in Dubai. “A merger would be extremely positive for the real estate sector in Abu Dhabi.”

The developers, which have played an integral part in Abu Dhabi’s drive to turn itself into a tourism and business hub, said in March they are studying a possible merger with the “blessing” of the emirate’s government. Property companies’ profits are picking up after house prices in Abu Dhabi slumped 50 percent in the aftermath of the 2008 global credit crisis.

Aldar may appoint Credit Suisse Group AG (CSGN), the second- biggest Swiss bank, while Sorouh may give the advisory mandate to Morgan Stanley (MS:US), owner of the world’s largest retail brokerage, a person familiar with the matter said yesterday, declining to be identified because the matter is private.

Profit Recovery

Aldar rose 3.7 percent to 1.11 dirhams, the highest since May 8, and Sorouh gained 3.9 percent to 1.07 dirhams, also the highest since May 8. Shares of Aldar and Sorouh have rallied 21 percent and 26 percent this year, respectively, after Abu Dhabi, holder of most of the United Arab Emirates’ oil reserves, said it plans to resume stalled projects including branches of the Louvre and Guggenheim museums.

The MSCI Emerging Markets Index (MXEF) rose as much as 1.1 percent, the most since March 27, as investors speculated China will accelerate spending in infrastructure to counter an economic slowdown and Germany vowed to spur growth among euro member states. The Stoxx Europe 600 Index (SXXP) gained 1.1 percent.

Saudi Arabia’s Tadawul jumped the most since April 21, advancing to 7,103.52. The advance was led by Al-Rajhi Bank, the country’s largest lender by market value.

Saudi Growth

The economic outlook for Saudi Arabia is “positive” after gross domestic product expanded 6.8 percent last year, Finance Minister Ibrahim Al-Assaf said. The non-oil industry will drive growth this year, he said at a conference in Riyadh today. Separately, Al-Assaf said the kingdom expects more corporate bond and sukuk sales in the future.

The Bloomberg GCC 200 Index (BGCC200) and Qatar’s QE Index (DSM) gained 0.9 percent, while Dubai’s DFM General Index (DFMGI) advanced 0.6 percent. Oman’s MSM30 Index (MSM30) rallied 2.3 percent, the most in more than a year. Kuwait’s gauge slipped 0.5 percent and Bahrain’s measure fell 0.7 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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