The Abu Dhabi Securities Exchange recovered some of its losses yesterday amid cautious buying from investors. Stocks tumbled on Tuesday and Wednesday, after the two telecoms companies Etisalat and du said they would be paying higher royalty fees to the Government.
"The bounce-back is expected because Etisalat will still be able to issue a cash dividend of 60 fils for this year," said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi.
"That translates to a yield of just over 6 per cent, which is very attractive. But some investors are still waiting for actual impact on the income statement."
Traders said Etisalat was still likely to come under pressure in the coming few sessions, as valuations are now deemed too rich.
"The multiple the stocks are trading at is considerably higher than other regional peers," said Marwan Shurrab, a vice president at Gulfmena Investments in Dubai.
"Now that we have clarity on what they look like, analysts will be crunching the numbers in their model projections. That will put pressure on equity."
Etisalat, which holds the largest weighting on the Abu Dhabi index, gained 3 per cent to Dh9.05. The shares dropped 8.9 per cent on Tuesday and 2.8 per cent on Wednesday. The ADX General Index advanced 0.3 per cent to 2,612.17 points
Du's shares fell 1.7 per cent to Dh3.45 in Dubai. The stock dropped 9.7 per cent on Tuesday, and added 0.2 per cent on Wednesday.
The Dubai Financial Market General Index slipped 0.1 per cent to 1,584.52.