Dubai Shares Drop on Restrictions, Kuwait Banks Rise: Inside EM

(Bloomberg) -- Dubai’s main equities index led losses in the Middle East after a fresh set of restrictions to contain the spread of coronavirus as cases keep rising. Banks in Kuwait advanced on potential dividend resumption.

The DFM General Index fell as much as 1.6% on Sunday, adding to a 2% drop on Thursday. The benchmark in Abu Dhabi, Saudi Arabia and Qatar also traded lower, while the main gauge in Kuwait rose the most.

Stocks in Dubai have risen the past few weeks on improved prospects for tourism and as a vaccination program in the United Arab Emirates picked up. But in the latest setback, the emirate announced over the weekend that attendance at weddings, social events and private parties will be restricted to 10 people, just after ordering hotels and restaurants to halt entertainment activities late last week.

In Kuwait, lenders including National Bank of Kuwait SAKP, Kuwait Finance House KSCP and Gulf Bank KSCP advanced after the central bank allowed lenders to distribute cash profits based on their 2020 financial results.

MIDDLE EASTERN MARKETS:

• Dubai’s DFM index falls 0.8% as of 11:27am local time, trimming gains this year to 8.9%
  • Emaar Properties declines 1.2%, Du -1.5%, Emirates NBD -0.4%, Damac Properties -2.9%, Emaar Malls -1%
• Kuwait’s Premier Market Index climbs 0.6%, after rising 0.3% last week
  • The “reassuring news” from the central bank is seen boosting confidence and leading to gains in the banking index in the near term, says Junaid Ansari, vice president of investment strategy and research at Kamco Investment Company
    • “We believe that dividends for 2020 are already factored in the current share prices of Kuwaiti banks, although the level of dividends would be critical for shareholders”
    • “With 2020 profits expected to be much lower than 2019, we expect this to reflect in dividend announcements.”
  • In 2020, restrictions were imposed “if the banks dip into the liquidity and capital relaxations provided by the central bank,” said Jaap Meijer, head of equity research at Arqaam Capital
    • If the lenders do not use any the support, “then they would have been able to pay dividends.”
    • “Qatari banks have also been able to distribute dividends, even though pay-outs have been moderated.”
• Equities gauges in Oman and Bahrain rise as much as 0.3%, while those in Saudi Arabia, Abu Dhabi and Qatar lose as much as 0.3%

EARNINGS RELEASES:

• Almarai (ALMARAI AB) FY Profit 1.98b Riyals, +9.5% Y/y; Est. 2.04b
• Saudi Telecom (STC AB) FY Profit 11.09b Riyals, +3.9% Y/y; Est. 11.01b
• Sabic Agri-Nutrients (SAFCO AB) FY Profit 1.29b Riyals, -12% Y/y; Est. 1.38b
• Saudi Kayan (KAYAN AB) FY Loss 784.7m Riyals, +23% Y/y; Est. Loss 833.1m
• Herfy Food (HERFY AB) FY Profit 53.6m Riyals, -73% Y/y; Est. 75.8m