17/01/2015 10:01 AST
Plunging crude, which hit a new six-year low, had its severe spell on 18% fall in Industries Qatar (IQ), leading the Qatar Stock Exchange slip throughout the week to settle 443 points lower at below the 12,000 mark.
Foreign institutions continued to be bearish but with lesser vigour as the main 20-stock index fell 3.6% during the week that saw Amwal forecast that Qatar could end up in small budgetary deficit of $5bn to $10bn if oil prices remained below $50 for the whole of 2015.
Domestic institutions’ reduced net buying were also seen exacerbating the bearish spell in the market during the week that witnessed report that Qatar and Shell not to proceed with the Al Karanaa project in view of weak oil prices, which according to various estimates may well drop to as low as $40 a barrel in the short term.
“For IQ, we estimate a 10% decline in product price would result in a 24% decline in net profit,” said Afa Boran, Head of Asset Management in Amwal, which manages assets worth QR400mn.
More than 71% of the stocks were in the red during the week that saw Amwal being “cautiously selective” in Qatar’s bourse; given the low oil price scenario.
Crude oil prices have corrected by over 50% from their highs in 2014 owing to excess supply, driven by higher US shale oil output and a fall in demand because of slowdown in many major economies.
Both Qatari and foreign retail investors were seen reducing their exposure in the market, where real estate, industrials and banking stocks dominated the trading ring with them constituting about 83% of the total trade volume.
Substantial selling was also seen in telecom, realty and transport sectors during the week that saw the index that tracks Shariah-principled stocks melt faster than the other indices.
The industrials stocks shrank 9%, telecom (2.33%), transport (2.16%), real estate (2.05%), banks and financial services (1.48%), insurance (1.44%) and consumer goods (1.07%) during the week that saw Qatar’s intention to allow dual listing of German companies as part of efforts to attract more German institutional investments into its bourse.
The 20-stock Total Return Index shed 3.6%, All Share Index (comprising wider constituents) by 3.29% and Al Rayan Islamic Index by 3.62% during the week.
Of the 43 stocks, only 12 gained, while 30 declined and one was unchanged during the week. Seven each of the 12 banks and financial services and the nine industrials; six of the eight consumer goods; four each of the five insurance and the four realty; and all of the two telecom stocks close lower during the week.
Major shakers included IQ, QNB, Aamal Company, Mesaieed Petrochemical Holding, Barwa, Ezdan, Mazaya Qatar, Vodafone Qatar, Ooredoo, Commercial bank, al khaliji, Doha Bank and Widam Food; even as Qatar Islamic Bank, Masraf Al Rayan, Nakilat and Gulf Warehousing bucked the trend.
Market capitalisation eroded 4.38% or about QR30bn to QR647.79bn during the week.
Foreign institutions’ net selling fell to QR133.29mn compared to QR212.27mn the previous week.
Domestic institutions’ net buying weakened to QR187.18mn against QR3202.7mn the week ended January 8.
Local retail investors’ net profit taking plummeted to QR55.61mn compared to QR113.74mn the previous week.
Non-Qatari retail investors’ net buying fell to QR2.01mn against QR5.99mn the week ended January 8.
A total of 47.73mn shares valued at QR2.87bn changed hands across 32,261 transactions.
The real estate sector saw a total of 18.68mn equities worth QR582.69mn change hands across 7,157 deals.
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