Qatar bourse stands out as Gulf markets sink on Europe fears

30/12/2011 07:32 AST

Most Gulf markets ended the year in deep losses yesterday, with the exception of Qatar and Saudi Arabia, after grappling with shaken local confidence and concerns over the unresolved eurozone debt crisis.

Faring the best among its peers, Qatar’s index ended 0.4% lower at 8,779 points, up 1.1% in 2011, as the only regional bourse gaining in the year.

“I don’t think Qatar is expensive—there is more upside potential considering its corporate earnings and economic growth rate,” said Shakeel Sarwar, asset management head at investment bank SICO in Bahrain.

Qatar’s economy is estimated to grow by 17.5% in 2011, according to a Reuters December poll.

In Saudi Arabia’s the index of the largest Arab bourse has lost 3.1% in 2011. It eased 0.3% yesterday, ahead of its last trading day of the year tomorrow.

Petrochemicals stocks pressured the market, as they tightly tracked oil price volatility, while subdued growth in banking stocks also weighed.

“We see two key trends for Saudi Arabia in 2012 - the global economy uncertainty and how that will affect us and volumes shifting from the region to the kingdom,” said Asim Bukhtiar, head of research at Riyad Capital.

“Investors will look more at companies with a domestic focus that are not dependent on exports.”

The Arab spring revolts hit Gulf bourses early in the year but they managed to recover the losses as local governments dished out large handout to stave off unrest, including $93bn in social spending announced by Saudi Arabia in March.

The eurozone debt crisis and a fragile state of US economy has kept foreign investors at bay, while local investors also cut risk in equities.

UAE markets edged to a higher close yesterday but are not far from their multi-year lows hit a few sessions earlier on lack of interest in local equities from institutional and foreign investors as volumes evaporated from the bourses.

In recent months, these markets have been tracking global markets, though tighter on the downside, in the absence of local catalysts. Market participants expect them to continue taking direction from world equity moves next year.

Property stocks were the main drag on the index for the year, as little signs or recovery in the sector since the 2008 bubble-burst failed to entice investors.

“In the UAE, companies’ growth is still not visible,” said Sarwar. “This perhaps is one of the reasons why the market has also underperformed. The real estate sector will continue to struggle next year—there are no signs of improvement.”

Dubai, whose property collapse led to a debt crisis, launched a real estate investment fund worth up to $1bn with Canada’s Brookfield Asset Management in a bid to revive the battered sector and restore investor confidence.

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Reuters