Investors will be looking for cues from Abu Dhabi's biggest property developers, Aldar Properties and Sorouh Real Estate, on the status of their proposed US$15 billion (Dh55.09bn) merger.
This week marks the end of the three-month period both developers said they would take to prepare a study to be put before their boards.
Sorouh is due to hold its board meeting tomorrow at its headquarters after local markets close.
Aldar and Sorouh accounted for more than a third of daily trading volumes on the Abu Dhabi Securities Exchange last week as investors built up positions ahead of an expected announcement.
"You have some local investors who think [tomorrow's] news will be a catalyst for the stocks," said Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi.
"People are trying to put assumptions on what could be the parity of the merger and who could come out as the main beneficiary."
Aldar rose 6.7 per cent last week to close at Dh1.11 on Thursday, while Sorouh gained 6.1 per cent in the same period to trade at Dh1.04 per share. The two stocks stopped moving in lockstep about three weeks ago. Aldar is trading at 0.6 times its book value, while Sorouh is trading at 0.4 times book value.
"It is interesting to see Aldar's shares have started to outperform Sorouh," Mr Henin said.
"Maybe investors think the merger will have a parity of 1 for 1, Aldar could be beneficiary. We know Sorouh's balance sheet, less leveraged less stretched, meanwhile Aldar has had three restructuring phases in the past 18 months, its balance sheet is cleaner than it has ever been. Aldar currently has a surplus of Dh900 million, while Sorouh has a budget gap of Dh1.5bn for which it can easily tap into the debt market but will be paying more."
Abu Dhabi property developers were hit hard by the global financial crisis in 2008, with prices tumbling by as much as 60 per cent from their peak in some places.
Aldar has already received more than $10bn in government funds and cut 105 jobs last November. Sorouh has also shed jobs over the past year.
"Abu Dhabi will have a much stronger company after the merger," said Marwan Shurrab, the chief trader at Gulfmena Investments in Dubai. "The new entity will be more efficient, cost saving.
Aldar built the F1 Yas Marina Circuit and Central Market developments while Sorouh is the developer behind projects that include Reem Island's Sun and Sky Towers.
The Abu Dhabi Securities Exchange General Index slipped 0.1 per cent last week to close at 2,439.65, while the Dubai Financial Market General Index fell 0.5 per cent to 1,463.69.
Egyptian investors are in wait-and-see mode ahead of a crucial run-off vote in the country's presidential election.
The run-off reflects a polarised political scene after more than 15 months of shaky military rule since the overthrow of Hosni Mubarak.
The last stage of voting on June 16 and 17 is a two-way race between Ahmed Shafiq, a former prime minister and an admirer of the deposed leader, and the Muslim Brotherhood's Mohammed Morsi.
Many Egyptians believe Mr Shafiq has the backing of the powerful army, while the Brotherhood has a formidable grassroots following and a well organised campaign machine, making the outcome hard to call.
Investors suspect if Mr Shafiq were to win it could spark far bigger protests on the streets and trading on the Cairo stock exchange has been muted ahead of the vote.
"If [Mr] Shafiq wins, I believe we're going to see signs of instability for the short term," said Amr Reda at Pharos Securities Brokerage.
But he said a win for either Mr Shafiq or Mr Morsi could help unblock aid from foreign donors including the IMF that has been delayed partly because Egypt has had a temporary government.
Egypt's benchmark index surged in the first quarter, hitting an eight-month high of 5,452 in early March to take it up 51 per cent since the start of the year. But following that, it has lost nearly 1,000 points, retreating as a July 1 deadline for the army to hand power to an elected president nears.
* with Reuters
