Abu Dhabi Shares Surge Most Since 2009 on Bets Banks Are Cheap

Abu Dhabi’s shares climbed the most since December 2009, led by banks, on investor speculation the shares are cheap relative to regional peers.

First Gulf Bank PJSC, controlled by the emirate’s ruling family, jumped 3.8 percent, leading gains in the benchmark index. Abu Dhabi Commercial Bank PJSC gained the most this month. The ADX General Index advanced 1.8 percent to 3,153.03 at the close in the emirate. Abu Dhabi’s banking index trades at an average of 9.6 times estimated earnings compared with 10.7 times for members of the Bloomberg GCC 200 Financial Index.

“Banks in the United Arab Emirates are doing well,” said Walid Mourad, Dubai-based fund manager at ING Investment Management Middle East Ltd. “They are trading below their book value, and are the cheapest compared to peers in the region. The cost of funding of these banks is stabilizing, and provisions are not expected to increase further.”

U.A.E. banks are showing signs of recovery after the global credit crisis weakened lending, crimped investment banking and spurred loan defaults. First Gulf Bank’s first-quarter profit may have climbed 15 percent to 1.08 billion dirhams ($294 million), according to the mean estimate of five analysts on Bloomberg.

First Gulf Bank climbed to 15.05 dirhams. Abu Dhabi Commercial Bank, the third-biggest U.A.E. lender by assets, increased 3.1 percent, the most since March 28, to 4.29 dirhams.

Before it's here, it's on the Bloomberg Terminal.