UAE stocks rally as traders expect companies to keep paying dividends
Published: 17:57 February 8, 2016
Dubai: UAE stocks rallied on Monday, reversing the previous session’s losses as crude oil recovered and traders expected companies to maintain dividends.
The Dubai Financial Market General Index (DFMGI) closed 1.89 per cent higher at 3,094.78, after gaining as much as 3,124.69.
“Markets are up because of the results and the dividends. Some results have missed estimates but companies have been able to maintain dividends,” Sanyalaksna Manibhandu, manager of research at National Bank of Abu Dhabi Securities.
“People were looking for more cuts in dividends, except for Union National Bank, but nobody has cut their dividends [so far]. In fact, companies have maintained or increased [their dividends],” he added.
Crude oil, which traded higher earlier in the session, also aided sentiment.
In stock-specific action, Emaar Properties closed more than 3 per cent higher at Dh5.62 after its mall unit posted strong results.
“Having in mind the given bearish characteristics in Emaar Properties, long-term traders should remain neutral at current times with the aim to reposition only after stronger trending characteristics appear on long term charts,” Menacorp said in a note to its clients.
Damac Properties also closed more than 3.5 per cent higher at Dh2.49, while Air Arabia closed 0.80 per cent higher at Dh1.26.
Amlak Finance ended the day’s trade 1.57 per cent higher at Dh1.29 while Dubai Islamic Bank closed more than 2 per cent higher at Dh5.98.
While medium-term traders remain neutral in Arabtec, the stock’s dip below the Dh1 level has indicated weakness, opening the way for a further decline.
“Medium-term bullish scenarios remain on hold in the near-term future while waiting for the share to show strong signs of support to contain further losses,” Menacorp said.
Out of a total of 35 stocks traded on the exchange, the shares of 19 companies rose, while those of nine ended lower. Seven shares remained unchanged.
“There is a feeling that management is not yet going to reduce dividends, and people are, in fact, buying dividends. But how far this will go on is an open question,” Manibhandu said.
“If corporate results come out and… crude and anything else [are] not deteoriating, then we can see everything go up a bit more.”
Traders will likely look at results from Emaar Properties, Aldar, Arabtec, Dana Gas, etisalat and du in the next 15 days or so, Manibhandu said.
Concern about crude have subsided to an extent and that comes at the same time as stronger hopes for dividends in the remainder of the reporting season, he added.
In Abu Dhabi, the index closed almost flat at 4,103.05.
“Long- and medium-term traders should remain outside of the market while bearish scenarios continue to develop on the Abu Dhabi index,” Menacorp said. “In the medium-term the market remains strongly bearish.”
Dana Gas ended more than 4 per cent higher at Dh0.48, while RAK Properties closed 0.492 per cent higher at Dh0.49.
Methaq Takaful Insurance closed 5.66 per cent higher at Dh0.56 while Aldar Properties was almost flat at Dh2.37.
“The long-term trend is strongly bearish in Aldar Properties — as marked by the fall below many daily strong support zones,” the Menacorp statement added.
Out of a total of 27 stocks traded on the exchange, the shares of 13 companies rose, while those of 10 others fell.
Fact box: Qatar index jumps 1 per cent
Saudi Arabia’s Tadawul All Share Index was almost flat in trade yesterday while Qatar’s index rose nearly 1 per cent.
Petrochemical blue chip Saudi Basic Industries gained 1.1 per cent before trading half a per cent lower at 66.25 Saudi riyals (Dh64.81). Alinma shares ended flat at 13.10 riyals.
Elsewhere in the Gulf region, the Muscat Securities MSM 30 Index closed 1.88 per cent higher at 5,398.47, while Kuwait’s index closed 0.05 per cent higher at 5,209.28.
The Bahrain Bourse All Share Index closed 0.10 per cent lower at 1,175.70.