Abdul Aziz Al-Faki from Dammam
Financial analysts emphasized that the period of cash dividends announced by listed companies in the Saudi stock market is considered significant for the rotation of shares between dealers, as well as to build financial centers in the market. Though, this period is usually accompanied by the traders' caution, which is a result of confusion on the market index.
Fahmi Sobha, the economic expert, said that cash dividends are considered positive decisions taken by boards of directors in public shareholding companies traded in the market. He believed that the decision reflects the success of the management in achieving the plan, marketing objectives, and maximize annual revenue, and thus benefit owners and shareholders. He added that the impact of distributions might be negative on the same share trades due to the reverse of the market. As today's announcement of cash dividends would be resulting in a decline in the prices of the stock and its sector due to the decline in the company's revenues of the same value and proportion. This has an impact on the national economy, where the market is the mirror of the reflection of the health of the economic situation.
He pointed out that this was due to the lack of a professional mechanism in the market that interacted with the cash distribution event as a positive situation, and the prices of the yielding stock should rise.
Hussain al-Roqaib, a financial analyst, stressed that cash distributions are of interest to investors. Therefore, this is a positive decision in the market, especially after developments related to cash dividends where the stage of stock rotation and market building begins. He added that the figures announced so far for the 2017 distributions amounted to about 56 billion riyals, which was an increase over the 2016 figures by about 3 billion riyals and 3.5 percent against the market value of all shares.
He pointed out that these figures are considered good and may rise with the announcement of the rest of the companies. He also explained that banks have achieved the highest figures in cash dividends, amounting to 23 billion riyals compared to 15 billion in 2016. This is a result of the reassurance of banks to the situation of the local economy, which resulted in the increase in the proportion of cash dividends.
As a result, the market continued to rise at the end of last week, despite the decline in global markets and oil prices. He pointed out that the rise came following the directives of the Crown Prince to end the dispute over the Zakat bowl of Saudi banks, estimated at about 12 riyals.
Ahmed Al Melhem, a financial analyst, said that cash dividends are apparently positive for investors who decide to buy stocks based on news and results of board meetings related to cash dividends to shareholders in these companies. Therefore, there is increasing demand for the shares of these companies to strengthen their financial position. However, what is important is to reflect positively on the market index, and stimulate the rest of investors and customers to move their liquidity towards these shares.
