January 8, 2018 / 2:19 PM / 10 months ago

MIDEAST STOCKS-Qatar leaps on dividend chase, Saudi loses steam

* Qatar outperforms region for second day

* Royal handouts not expected to trigger Saudi boom

* Saudi’s United Electronics rises after Q4 profit estimate

* Dubai’s DSI closes lower after debt restructuring

* Egypt’s Palm Hills surges as UPP Capital buys shares

By Andrew Torchia

DUBAI, Jan 8 (Reuters) - Qatar’s stock market surged on Monday, outperforming the rest of the region for a second straight day as investors bought to secure dividends, while Saudi Arabia lost steam after rising in response to a royal package of handouts to consumers.

The Qatari stock index gained 2.6 percent and trading volume almost doubled from the previous day as Islamic bank Masraf Al Rayan added 3.2 percent and Qatari Investors Group jumped by 6.9 percent.

Qatari companies, which historically pay high dividend yields, are due to announce fourth-quarter or annual dividends in the next few weeks, and yields could be boosted by the drop in stock prices after the economic embargo imposed by four Arab states on Qatar.

The embargo has driven up funding costs for Qatari banks and some importers, but recent data suggests that long-term economic growth will suffer only moderately.

The Qatari index has now rebounded to within 10 percent of its pre-embargo level, having plunged 22 percent at one stage.

In Saudi Arabia, the index edged down 0.1 percent, after gaining 0.6 percent on Sunday in response to King Salman’s 50 billion riyal ($13.3 billion) of measures to help citizens cope with the rising cost of living.

The package looks likely to help the economy to avoid recession this year, though higher gasoline prices and this month’s introduction of value-added tax could drag on growth.

Consumer electronics retailer United Electronics Co , however, rose 2.7 percent after saying fourth-quarter net profit is estimated to have climbed to 57.6 million riyals from ‍​26.3 million riyals a year ago.

Car hire company Budget Saudi rose 2.2 percent. The stock has soared 10 percent in the past four trading days, partly in anticipation of Saudi women being allowed to drive later this year.

The Dubai index gained 0.6 percent as amusement park operator DXB Entertainments rose 1.6 percent and builder Arabtec climbed 1.9 percent.

Builder Drake & Scull, the most heavily traded stock, rose in early trade but closed 0.4 percent down at 2.29 dirhams after saying it had completed restructuring its corporate bank debt and had secured new credit lines and working capital facilities for its projects.

The stock had already risen from about 1.70 dirhams in early November and some analysts think it is now overvalued.

GFH Financial fell 1.3 percent after announcing that major shareholder Integrated Capital had reduced its stake to 6.72 percent from 8.01 percent. It did not give a reason. Integrated Capital is owned by Shuaa Capital, an affiliate of Abu Dhabi Financial Group.

A source familiar with the matter told Reuters that the shares had been bought by the Goldilocks fund, which is managed by a subsidiary of Abu Dhabi Financial Group, so the group was essentially changing the way it held the shares rather than bailing out of GFH.

Egypt’s blue-chip index gained 1.2 percent after the market reopened following a public holiday.

Real estate developer Palm Hills jumped 8.6 percent. After the close, the exchange said UPP Capital Investment, a unit of Dubai’s Union Properties, had bought 16 million Palm Hills shares, raising its stake to 5.68 percent.

SAUDI ARABIA

* The index edged down 0.1 percent to 7,310 points.

DUBAI

* The index gained 0.6 percent to 3,490 points.

ABU DHABI

* The index added 0.6 percent to 4,586 points.

QATAR

* The index shot up 2.6 percent to 8,976 points.

EGYPT

* The index rose 1.2 percent to 14,953 points.

KUWAIT

* The index edged down 0.1 percent to 6,498 points.

BAHRAIN

* The index edged up 0.1 percent to 1,320 points.

OMAN

* The index fell 0.2 percent to 5,108 points. (Additional reporting by Stanley Carvalho in Abu Dhabi; Editing by David Goodman)

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