The takeover of Dubai Bank by Emirates NBD lifts Dubai Government bonds.
Takeover lifts Dubai bonds
Dubai Government bonds rallied after the emirate ordered Emirates NBD to take control of Dubai Bank.
The yield on Dubai's 10-year government bonds fell 42 basis points to 5.86 per cent, while the yield on five year-bonds issued by Dubai Holding Commercial Operations Group (DHCOG) fell 22 basis points to 16.83 per cent.
Dubai Holding, the parent of DHCOG, previously indirectly held a 70 per cent stake in Dubai Bank.
Emirates NBD weighed on the Dubai Financial Market (DFM) General Index, with shares in the UAE's biggest bank falling 1.5 per cent to Dh3.74, their lowest since April 20.
"In the short term, it's going to have a slightly negative impact," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "But in the longer term, it's probably a better idea to see consolidation in the banking sector, especially for a small lender like Dubai Bank. The only uncertainty is the level of non-performing loans."
The DFM General Index declined 0.1 per cent to 1,387.90, while stocks on the Abu Dhabi Securities Exchange General Index slipped 0.1 per cent to 2,494.21.
Other financial stocks also recorded losses.
The Islamic mortgage lender Tamweel declined 0.1 per cent to 71 fils. The DFM, which is listed and trades as DFM Company, fell 0.9 per cent to Dh1.01.
Kuwait's measure rose 0.1 per cent to 5,859, Bahrain's inched up 0.1 per cent to 1,155.57, Oman's slipped 0.1 per cent to 5,561.19, and Qatar's advanced 0.8 per cent to 8,352.60. The Saudi Tadawul All-Share Index was down 0.2 percent to 6,118.62.