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Sahem Weekly Trading Report (02-06)-04-2017
Trading in Palestine Stock Exchange PEX was active this week coinciding with the momentum of holding the general assembly GA meetings of the listed companies to approve dividends distribution for 2016; of them the GA of the largest two weighted companies in Al-Quds Index- Palestine Telecommunications PALTEL and Bank of Palestine BOP. Whereas, the Index closed at the level of 530.13 points; down by 1.62% than its previous closing level and affected majorly by a noticeable decline in the price of the heaviest weighted stock in it- PALTEL- after holding its GA meeting. Whereby, the PEX has entered a phase of exchanging investment positions between traders to entitle the dividends payments in order to maximize the investment return. These attempts have led to price declines; following the variation in the traders’ interests during the period, in parallel to the spontaneous decline in the companies’ stock prices that have just approved cash dividends distribution. On another hand, a final agreement was signed this week with the Israeli occupation to allow the Palestinian telecommunications companies provide and operate 3G frequencies in the West Bank excluding Gaze in 6 months. This came despite providing 5G frequencies by the Israeli companies; to remain the dominant in the market. Moreover, it was approved to provide 2G frequencies in Gaza Strip and allowing Wataniya Palestine Mobile Telecommunications WATANIYA to operate in Gaze Strip after preventing it, since its establishment, from entering Gaza market; in which JAWWAL -the cellular communication company of PALTEL- was the only operator in Gaza and is still.
Regarding the dividends approvals of the blue-chips, the GA of the largest company by market capitalization- Palestine Telecommunications PALTEL- approved, in its meeting on 05/04/2017, the board of directors BOD’s recommendation to distribute 40% cash dividends for the year 2016, to record dividends yield of 7.75% based on the price of the entitlement date and payout ratio of 65.79%. On another hand, PALTEL topped the PEX by 56.20% when recorded trading value of $5.85 million, to close at the level of JD4.78; down by 6.82%. This drop in the company’s stock price after the GA meeting is attributed to the fact that the stock is trading without dividends entitlement, as the stock doesn’t hold cash dividends and is not equivalent to its price prior to the GA meeting that should carry dividends. However in the banking sector, the GA of the largest bank by market capitalization- Bank of Palestine BOP- approved, in its meeting on 06/04/2017, distributing 2.56% stocks dividends, to raise the paid-up capital to $200 million. In addition to distributing 10.44% cash dividends, to record dividends yield of 3.82% based on the entitlement date price and 40.00% payout ratio. In the same sector, the GA of the Arab Islamic Bank AIB approved, in its meeting on 02/04/2017, distributing 12% cash dividends for the shareholder, to record dividends yield of 6.49% based on the entitlement date price, and 96.77% payout ratio. The GA also approved raising the paid-up capital by $25 million through offering shares for secondary subscription for the shareholders as for 30/03/2017 at the price $1.25 ($1 par value and $0.25 premium), to reach $75 million.
Moreover in the insurance sector, the GA of the National Insurance Company NIC approved, in its meeting on 30/03/2017, distributing 20% cash dividends for the shareholders, to record 6.25% dividends yield based on the price of the entitlement date and 59.00% payout ratio. However, NIC’s price declined but traded higher than its equivalent price. Regarding the dividends distribution proposals for the year 2016, the recommendations of the blue-chips’ board of directors were completed with the proposal of Palestine Development and Investment Company PADICO to the GA that will be holding a meeting on 15/05/2017, to distribute 5% cash dividends, to record dividends yield of 4.63% based on the current market price.