Markets Wrap: Property developers both decline 2.2 per cent after failing to provide update on expected merger.
Abu Dhabi's Aldar and Sorouh disappoint investors
Abu Dhabi's two biggest developers declined yesterday after an expected merger update with third-quarter filings did not come about, disappointing investors.
Aldar, which developed Yas Island and Ferrari World, reported a 43 per cent increase in quarterly profit to Dh206 million on Wednesday. Sorouh, which developed Reem Island's Sun & Sky Towers, said profit stood at Dh129m, a 55 per cent increase on the same period a year earlier.
The two companies on Wednesday reiterated that they were in advanced discussions over a potential merger, but did not give further details.
"Investors were disappointed that the companies did not provide any new information on the merger, which is why there is some weakness on the stocks," said Anastasios Dalgiannakis, the head of institutional trading at Mubasher Financial Services in Dubai.
Property companies in Abu Dhabi were hit hard by the global financial crisis in 2008, with prices dropping as much as 60 per cent from their peak in some places. A merger would create a larger entity with US$15 billion in assets that would be dominant in the capital and help to reduce overheads and competition for business at the same time.
The Abu Dhabi Securities Exchange General Index slipped 0.08 per cent to 2,674.39 points, while the Dubai Financial Market General Index added 0.7 per cent to 1,617.47.