Dubai: Investors seeking dividends are expected to go on a buying spree this week on UAE bourses, even as expectations of good fourth quarter results from banks like Dubai Islamic Bank and Emirates NBD this week could trigger more money in the market from traders, who have been on sidelines for months.
The Dubai Financial Market general index started the year on a strong note playing catch-up after a weak performance in 2017 compared to its emerging market peers. The Dubai index has gained 4.24 per cent so far in the year, compared to 4 per cent gains in MSCI emerging market index.
“This is the annual dividend announcement season and investors are positioning accordingly. We have already seen some high yielding stocks especially telecoms make a good move up and expect more of the same,” said Vrajesh Bhandari, portfolio manager, Mena equities at Al Mal Capital.
Analysts expect higher dividends from banks like Dubai Islamic Bank and other peers.
Yields
“Investors in the UAE want a number of things: first they want a dividend yield of 4.5-5 per cent. If you don’t have a good dividend yield, you need to have good price to book ratio or good market position,” Sanyalaksna Manibhandu, head of research at First Abu Dhabi Bank Securities told Gulf News.
Investors would also eye results from banking, which will kick-start this week with results from Dubai Islamic Bank and Emirates NBD, and real estate companies that would decide the market direction. Analysts expect better than expected results from banks to attract additional liquidity from investors who have been on the sidelines due to underperformance in local stock indices.
“Banking results could surprise to the upside, as we saw the third quarter was better than expected, and the fourth quarter is better than the third quarter. In property, expectations have been brought down. as people are worried about oversupply, and the impact of rising interest rates on revenue of property companies,” Manibhandu said.
Good results would mean capital appreciation as well better dividends for shareholders, analysts said.
Bhandari from Al Mal Capital agreed.
“We like Banks. Since the fourth quarter of 2016 was difficult because of high provisions and as such a base should be easy to beat. Dubai real estate developers could show lower off plan sales, on account of soft demand from Saudi and other regional buyers,” Bhandari said.
Factbox: Ethereum sees rapid rise
Ethereum registered rapid gains last week on expectations of new initial coin offerings by making the cryptocurrency as the underlying.
Ethereum jumped more than 161 per cent in January to touch a life high of $1,424 (Dh5,226) on Saturday, according to data from Bitfenix, whereas Bitcoin has been witnessing a ranged trading holding near its key support zone $12,500-$13,000.
“Ethereum is facing the same fate as Bitcoin. Ethereum is regularly processing more than one million transactions a day, which is more than the entire market combined. Bitcoin only processes about 420,000 per day. The need to scale the platform is becoming increasingly apparent,” Saxo Bank said in a weekly note.
On Sunday, Ethereum was up 0.36 per cent at $1,348.58, while Bitcoin was down 4 per cent at $13,743.50.
— S.S.M.
