Abu Dhabi Securities Exchange tracked the heavy sell-off on DFM yesterday as it closed down for the seventh consecutive session.
The ADX General Index fell 56.39 points, or 2.15 per cent, to 2571.16 from the previous close of 2627.55. With the exception of the industrial segment, the remaining sub-indices closed lower with losses ranging from 0.3 per cent 6.07 per cent.
"DFM and ADX both broke key support levels and this is negative for the markets," said Vyas Jayabhanu, Head of Al Dhafra Financial Broker. "News of Emaar and Dubai Holding companies merger talks influenced the trading pattern on ADX and DFM. Once DFM went down, investors started withdrawing their positions on ADX as well."
Oil prices fell on Friday to $69 per barrel, which affected market sentiment. The merger news made the market more volatile.
"The Amlak and Tamweel merger saga is still going on but nothing has happened," said Jayabhanu. "And banks that have exposure to the Saudi businessmen who are in financial difficulties saw their stocks reeling from selling pressure. Emaar should hold a media briefing to address the doubts among investors about the proposed merger. If it goes the same way as Amlak and Tamweel then market sentiment will deteriorate further."
ADCB fell 7.27 per cent to Dh1.53 for a second session running, taking its total loss to more than 14 per cent.
"News of ADCBs $500 million [Dh1.8bn] exposure to the Saudi market severely affected market sentiment," said Jayabhanu. "Perhaps no news is good news for the market, because its mostly news that has affected trading lately."
Other financial shares slipped because of weak market sentiment over banks exposure in Saudi Arabia. ADIB fell 3.06 per cent, CBI eased 4.95 per cent, NBAD fell 2.46 per cent. RAKBank recorded a heavy loss of 9.46 per cent, while other majors such as Waha Capital and UNB followed suit with losses of 6.25 per cent and 3.49, respectively. Property majors Aldar and Sorouh also fell. Unless banks make clear their exposure levels the pressure on banking stocks is expected to continue.