DFM in action
Investors are turning extremely cautious about stock and corporate profits. Image Credit: Gulf News Archive

Dubai: The rise in coronavirus infections across United States has triggered concerns of a second wave and has hit global stock markets hard. UAE indices were also not spared as DFM declined by 0.47 per cent while ADX fell by 0.97 per cent for the day.

On DFM, DXB Entertainment, which fell 4.76 per cent, was the top loser, and this is not surprising as the stock is extremely sensitive to news about the virus. As the region’s top theme park operator, DXB Entertainment is closely related to reopening of the economy and that of international travel.

It must be noted that more than 43 per cent of the 2.6 million visitors to DXB Entertainments were from overseas.

Emirates NBD also fell by more than 1 per cent after news came out that it was planning terminate 800 employees, which equals to almost 10 per cent of its workforce. It is not clear if economic slowdown was the primary driver of that decision since UAE Central Bank data suggest the number of bank branches in the country has been coming down for the last few years.

The trend in banking is turning digital and this move in reality might help Emirates NBD improve its productivity as well as reduce salary expenditure.

On ADX, NMDC (National Marine Dredging Company), which rallied by 14.84 per cent, was the top performer after the company announced Dh62.5 million as dividend payout, which amounts to 25 per cent of its share capital.

NMDC had posted an impressive 83.5 per cent revenue growth and EPS rose 61.7 per cent in 2019. With a market capitalization of Dh890 million, the forward dividend yield of NMDC is 7 per cent. The per share dividend is the same as last year and the issuance points to the presence of a shareholder-friendly management.

- Vijay Valecha is Chief Investment Officer at Century Financial.