Domestic institutions’ buying support lends bullish momentum


08/02/2014 09:28 AST

Domestic institutions’ buying support lent bullish momentum but gains on the Qatar Exchange (QE) were rather masked by robust additions in the Gulf neighbourhood.

With dividend expectations already being discounted, the QE witnessed two of its five trading sessions in negative trajectory but overall its 20-stock Qatar Index closed 0.33% higher in the week.

This compares with stupendous 4.27% accrual in Dubai, 1.04% in Abu Dhabi, 0.98% in Kuwait, 0.76% in Bahrain, 0.67% in Saudi Arabia and 0.27% in Muscat.

Buying interests — especially in the insurance, banking and consumer goods sectors — had lifted the QE in the week that saw global credit rating agency Standard and Poor’s downgrade its long term rating on Ooredoo on likely higher leverage and lower free cash flow.

Foreign institutions continued to be net buyers, but with lesser intensity in the week that witnessed QNB, Qatar’s largest lender, outline its plans to invest “strategically”, primarily in the Middle East and North Africa and sub-Saharan Africa regions.

Small and mid cap equities found favour among investors in the week, which saw Abu Dhabi Investment Company aver that foreign funds inflows into Qatar ahead of the MSCI upgrade in June and the expected high dividend yields bode well for investors in the stock market.

However, local retail investors’ net selling pressure was seen to intensify in the week that witnessed Masraf Al Rayan invest more than £75mn to enhance the core capital of its newly acquired International Bank of Britain.

The 20-stock Total Return Index rose 0.87%, All Share Index (comprising wider constituents) by 0.72% and Al Rayan Islamic Index by 0.16% in the week that saw Al Meera Consumer Goods Company call-off the deal with Regency Group and Aramex International to build joint venture in logistics facility.

QE has risen 7.83% year-to-date (YTD) compared to 16.67% in Dubai, 10.06% in Abu Dhabi, 4.43% in Bahrain, 3.98% in Muscat, 3.74% in Kuwait and 3.32% in Saudi Arabia.

More than 57% of the traded stocks extended gains. Of the 42 stocks, 24 advanced; while only 15 declined and three were unchanged in the week that witnessed a global law firm Pinsent Masons say that Qatar’s mammoth capital expenditure on infrastructure upgrade has offered immense potential, especially for transport and real estate segment and is not expected to “overheat” the construction industry.

Insurance stocks appreciated 2.95%, banks and financial services (2.08%), consumer goods (0.88%) and transport (0.16%); while real estate fell 1.08%, industrials (0.99%) and telecom (0.32%) in the week that saw Qatar Electricity and Water report 4% fall in net profit in 2013.

Seven of the eight industrials, six of the 12 banks and financial services, four of the eight consumer goods, three of the five insurers, two of the four realty and one each of the two telecom and the three transport scrips closed higher in the week.

Among the influential movers were Qatar Islamic Bank, Commercial Bank, Doha Bank, International Islamic, Masraf Al Rayan, Vodafone Qatar, Salam International Investment, Mazaya Qatar, Ezdan, Gulf International Services, Milaha, Qatari Investors Group, Qatar Insurance and Doha Insurance.

However, Industries Qatar (IQ), QNB, Barwa, United Development Company, Ooredoo and Nakilat bucked the trend.

The overall market trading volume was largely skewed towards banks and financial services, consumer goods and real estate sectors in the week.

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