By: Mahmoud Gamal
Mubasher: Companies listed across GCC stock markets have begun disclosing their annual financial results along with cash dividend distributions. Such announcements are likely to bolster bourses towards further gains in the coming period, analysts told Mubasher.
Most of the GCC-listed banks have posted robust results, pushing the bourses towards consecutive gains at the end of last week.
Recovery and stability
GCC bourses have recently recovered on the back of positive financial indicators for 2018, particularly the banks sector, vice president of Investment Research at KAMCO Raed Diab told Mubasher.
Moreover, global oil prices settled recently, which will mainly boost the GCC markets in the coming period, he said.
Diab further projected that the overall financial results for 2018 for the GCC-listed stocks will improve as compared with the prior year's results, indicating that the Q4-18 profits season would be mainly led by the banks, real estate, and consumer services sectors.
On the other hand, the analyst expected the property sector's weak performance to negatively impact the financial results of the listed companies in the region as the profits of real estate firms declined during Q3-18.
Diab also noted that the consumer services firms, including food, beverage, and entertainment companies, were still under pressure in most GCC markets as their profits plunged during the first nine months of 2018.
Attractive levels
For his part, Marwan Shurrab, senior vice president and head of HNW and retail equities at Al Ramz Capital, said that the banks sector’s stocks in the UAE and other markets in the region were trading at attractive price/earnings ratios.
The financial statements announced by banks have been positive so far and support the stability of the stocks, Shurrab highlighted.
He pointed out that speculation on stocks, which negatively affects trading, was currently raising concerns across GCC bourses, especially the Dubai Financial Market (DFM).
The markets are still suffering from the absence of the institutional investments, which pushed them to move sideways over the past period, he stressed.
Investors’ appetite
Issam Kassabieh, senior financial analyst at Menacorp Financial Services, expected 2018 financial results and dividend distributions would improve investors’ appetite to trade on operating stocks that do not suffer any financial impairment.
Investor concerns are currently limited to the DFM due to the drop in real estate prices and their subsequent impact on firms’ plans and anticipated dividends, Kassabieh added.
GCC markets are likely to be more active when telecommunication companies announce their financial results and cash dividends distributions, he projected.
The senior financial analyst further noted that some external factors, including the stability of oil prices and that of US and European stock markets, in line with the impact of current interest rates on investors, may push GCC markets to similar stability, led by the DFM.
Generous dividends payments
Additionally, technical analyst Ibrahim Al-Failakawi told Mubasher that GCC stock markets were expected to recover slightly in Q1-19 when blue-chip stocks unveil generous cash dividend distributions, emphasising that most leading stocks were trading at attractive price levels despite moving in narrow ranges.
The markets need new institutional and foreign liquidity, he said, pointing out that positive catalysts will boost the companies’ performance and the economy in general, particularly in Saudi Arabia, the UAE, and Kuwait.
Translated by: Mai Ezz El-Din
