Abu Dhabi’s benchmark index climbed to the highest level in more than two weeks as investors bought banking stocks to take advantage of higher dividends.
First Gulf Bank PJSC (FGB), which recommended a cash dividend of 83 fils a share for 2012, rose to the highest level on record. Abu Dhabi Commercial Bank PJSC (ADCB) advanced for the second time in three days. The ADX General Index (ADSMI) gained 0.6 percent to 3,049.60, the strongest close since Feb. 27. Dubai’s DFM General Index (DFMGI) increased 0.1 percent.
United Arab Emirates financial institutions have raised dividends as they recover from the impact of the global credit crisis which slowed lending, hit investment banking, and led to a surge in loan-loss charges. Abu Dhabi banks offer an average dividend yield of 5.2 percent versus 3.4 percent for the Bloomberg GCC 200 Financial Index (BGCCFINL) of the Gulf Cooperation Council’s most-traded stocks.
“Investors are switching positions to high-dividend paying stocks like banks in Abu Dhabi,” said Nabil Farhat, partner at Abu Dhabi-based Al Fajer Securities. “Earnings prospects are good for banks this year with potential growth in aggregate profits of at least five percent.”
Middle East and North Africa equities are poised to outperform emerging markets as higher dividends and state-funded expansion lure investors hunting for better returns, Franklin Templeton Investment Management Ltd. said in December. The Bloomberg GCC 200 Index has gained 4.6 percent in 2013 compared with a drop of 1.2 percent for the MSCI Emerging Markets Index. (MXEF)
First Gulf, whose 2012 profit grew 12 percent, advanced 2.2 percent to 13.85 dirhams, the highest since May 2001, when Bloomberg started tracking the shares. The bank will probably post the fastest loan growth in the U.A.E. in 2013, EFG-Hermes Holding SAE said in December. Net income this year may advance 7 percent, according to the mean estimate of 10 analysts compiled by Bloomberg.
Abu Dhabi Commercial, the third-biggest U.A.E. lender by assets, said in January it would pay a 25 percent cash dividend for 2012, up from 20 percent a year earlier. The lender’s fourth-quarter profit rose 19 percent, beating estimates. The shares, which have surged 33 percent in 2013, gained 0.5 percent today to 4 dirhams.
Crude oil for April delivery climbed 1.6 percent last week to $93.45 a barrel in New York. Gulf Arab oil exporters, including the U.A.E., supply about a fifth of the world’s oil. About 107 million shares traded in Abu Dhabi today, compared with a 12-month daily average of 81 million, according to data compiled by Bloomberg.
Elsewhere in the Middle East, Bahrain’s measure advanced 0.2 percent. Oman’s MSM30 Index climbed 0.8 percent to 6,153.25, the highest since May 2011 and Kuwait’s gauge rose 0.2 percent. Saudi Arabia’s Tadawul All Share Index (SASEIDX) gained 0.4 percent. In North Africa, Egypt’s benchmark EGX 30 Index (EGX30) was little changed.
An International Monetary Fund director is set to meet today with Egyptian officials amid efforts to advance a stalled $4.8 billion loan agreement, a day after opponents and backers of President Mohamed Mursi clashed in Cairo. Egypt’s benchmark stock index has declined 4.6 percent this year after surging 51 percent in 2012.
Israel’s TA-25 Index (TA-25) declined 0.5 percent at 3:33 p.m. in Tel Aviv. The yield on the government’s benchmark 4.25 percent bonds due March 2023 fell three basis points, or 0.03 percentage point, to 4.02 percent.
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