Gulf markets remain sluggish

11/03/2015 05:10 AST

Stock markets in Saudi Arabia and Egypt stalled yesterday after rising for three days in a row, while most Gulf bourses remained sluggish and banks dragged down Oman as its central bank advised several lenders to reduce cash dividends.

The main Saudi benchmark slipped 0.1% to 9,613 points after meeting strong technical resistance near the 200-day average of 9,662 points.

Telecommunications firm Mobily dropped 4% after surging 21% in the previous three sessions on hopes that it would recover following a shock 2014 earnings revision.

The petrochemicals sector fell 0.6% as Brent crude dipped 1.7% to $57.51 per barrel and the oil market remained hobbled by oversupply and weak demand.

Saudi International Petrochemical Co (Sipchem) fell 0.8% after specialist news agency Polymerupdate reported, citing a source, that the firm’s methanol plant was operating at 80% of production capacity.

Saudi British Bank, which will register shareholders for a dividend payout tomorrow, edged up 0.5%. Alinma Bank, which has gone ex-dividend, fell 0.8%.

Dubai’s index was flat as most stocks gained but heavyweight Dubai Islamic Bank tumbled 5.9%; its shares no longer carried the 0.40 dirham 2014 dividend.

Union Properties surged 5.9% after proposing a 3%, or 0.03 dirham per share, cash dividend and a 5% bonus share issue for 2014. It would be the company’s first cash dividend since 2002, according to Thomson Reuters data. Union Properties last issued bonus shares for 2013, a 5% issue.

Islamic insurer Takaful Emarat surged 14.2% on its highest trading volume in more than a year after the firm said on Monday its board had decided to “discuss the decision on profit dividend during the annual general meeting” to be called soon, although it made no concrete proposal for a payout.

Takaful Emarat has never paid dividends since listing in 2008, according to Thomson Reuters data, and 2014 was its first profitable year.

Abu Dhabi fell 1.4% because of large lenders Abu Dhabi Commercial Bank and First Gulf Bank which dropped 4% and 3.8% respectively.

Abu Dhabi National Energy Company dropped 2.7%. The firm is due to report fourth-quarter earnings this month and its profit is likely to take a hit from oil’s plunge late last year.

Qatar’s benchmark edged up 0.2% and Ezdan Holding was the main support. The firm said yesterday its shareholders had approved a decision to treat investors from the Gulf Co-operation Council countries as locals, meaning that the 49% limit on foreign ownership in the company will no longer apply to them.

Property firm United Development dropped 4.1% as it went ex-dividend.

Oman’s bourse fell 0.9% as most banking stocks declined. National Bank of Oman and Bank Muscat fell 3.4% and 2% respectively, while Bank Sohar lost 2.4%.

Sohar and non-banking financial firm Taageer Finance Co said this week that they had reduced proposed cash dividends for 2014 on the advice of the central bank. After yesterday’s close, Bank Dhofar also said it had cut its proposed cash dividend for 2014 to 5% from 10% based on the recommendation of the central bank.

The bank did not explain the reasoning behind the recommendation, but said it would increase its bonus share issue to 15% from 10%. Oman’s central bank has not released a statement on its policy towards dividends but it may be concerned that low oil prices and the government’s budget deficit could start to tighten banking system liquidity later this year, making it important for banks to keep cash reserves.

Egypt’s market closed nearly flat after gaining 2.7% in the previous three sessions. Most stocks pulled back and Telecom Egypt dropped 4.4%, having reported a 31.4% slump in profit for 2014.

Gulf Times