06/07/2010 00:00 AST
Qatar Exchange witnessed a correction yesterday after days of slowdown. The main 20-stock index of the bourse surged 58 points to 6,824.70 with 34 of the 42 listed entities showing gains.
The index gained despite the fact that foreign institutional investors continued to be on a selling spree. There was, though, some net buying support from foreign retails investors as well as Qatari institutions and small investors.
Major advancers at the close of trading yesterday were Gulf Insurance, Ezdan Real Estate, Qatar Cinema, Qatar Fuel (Woqod) and Qatar Islamic Insurance. Barely two stocks lost while three remained unchanged.
The market capitalization of the bourse inched up a bit to QR361.38bn but remained below the psychologically critical level of $100bn (QR365bn).
Analysts maintained that they would not hazard a guess about the market trend although it should look up, especially since second quarter (Q2) results are expected to begin trickling in any time now.
Meanwhile, Middle East markets rose yesterday as a slight improvement in Asian stocks drew in regional bargain hunters following recent declines, but traders warn the gains could prove temporary.
Six of the eight benchmarks advanced, with Qatar the biggest gainer, climbing 0.9 percent. Kuwait slipped to a new five-year low as confusion over new trading rules and downbeat expectations for quarterly earnings pushed investors to exit.
Saudi Arabia rose 0.5 percent, ending a six-session losing streak. Steady oil prices bolstered petrochemicals stocks, with Saudi Basic Industries Corp (Sabic) climbing 1.8 percent to SR84.50.
“People are looking for any positive signs, because there is an appetite to buy petrochemicals at these levels, especially Sabic, which is almost a giveaway at the low 80s (riyals),” said a Riyadh trader who spoke on condition of anonymity.
“Earnings season has started, but no major companies have reported and I’m not entirely convinced people care that much. They’re looking ahead to Q3 and the demand outlook for China is very murky given all the weak macro data of the past few weeks.”
China is a major export market for Saudi petrochemical producers and so a slowing Chinese economy would hit profits.
“The market sell-off looks over done, so Saudi should have a positive week as should global markets, but a relief rally is unlikely to last,” added the trader.
Kuwait’s index slipped to 6,320 points, its lowest finish since November 2004. More selling pressure is likely, with investors unsure about new trading rules brought in ahead of the launch of the country’s first market regulator.
“Kuwait has nothing - it’s an event driven market and without anything happening, liquidity is low,” said a Kuwait trader who asked not to be identified. “The index should fall to 5,800 points before it finds some bounce.”
National Bank of Kuwait (NBK) rose 1.8 percent and Wataniya added 1.2 percent.
“I don’t expect any major surprises in Q2 earnings — they should be lower than Q1 and any companies that mark to market are going to be in trouble,” added the trader. “A few defensive names like NBK and Wataniya will outperform, but companies that rely on the stock market for revenues will struggle.”
The Peninsula
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