QSE stocks ‘still expensive’ than GCC peers, says MDPS

10/06/2015 01:20 AST

Equities listed on the Qatar Stock Exchange’s (QSE) are “still expensive” compared with other regional bourses, the Ministry of Development Planning and Statistics (MDPS) has said.

As of end-April this year, the QSE’s price-to-book ratio stood at 1.9, surpassed only by the Saudi Stock Exchange at 2.3, MDPS said in its Qatar Economic Outlook for 2015-17 yesterday.

The domestic bourse’s trailing 12-month price-to-earnings ratio stood at 14, but was exceeded by Saudi Arabia (18) and Kuwait (15).

The MDPS report noted that the performance of regional bourses remains closely tied to the fortunes of the hydrocarbon sector, with the recent exception of Saudi Arabia.

Whereas the MSCI emerging markets index had risen 9.6% from the beginning of the year through to April 2015, the MSCI GCC (Gulf Cooperation Council) has risen 15.4%, reflecting the recovery in the price of oil (Brent is up 12.8% year to date).

MSCI Qatar is trailing behind, however, with a 0.9% fall.

“The earlier sharp slide in the oil price led to the QSE index registering a five-year high in volatility, with the annualised standard deviation of daily returns standing at 17.2% since January 2014,” it said.

Among the 43 stocks listed on the QSE, firms concentrating on insurance and financial services posted the largest gains in 2014, with insurance registering 69.4%.

The MDPS also outlined the journey of the QSE through MSCI upgrade to emerging market and beyond.

From January 2013 until April 2015, net buying by foreign institutions was about QR13.28bn.

The average daily value traded increased from QR252.5mn (January–May 2013) to QR539.6mn (June 2013–April 2014) and QR697.7mn (May 2014–April 2015).

During this period, the QSE Index jumped by 43.97% and the MSCI Qatar Index by 48.53%. On the debt market, the MDPS said the market for treasury bills and bonds remains shallower than that for equities.

Despite the Qatar Central Bank issuing QR48bn of treasury bills throughout 2014, the traded value of all treasury bills over the year declined 0.8% to QR3.95bn.

Likewise, the secondary market for government bonds was thin, with two issues responsible for 68% of all trades throughout the year. Those traded in the secondary market came to 2.4% of all outstanding government bonds and sukuks.

“Government authorities have sought to increase transactions in these instruments to support wider financial development objectives,” it said.

Gulf Times