Qatar index dips from 10-week high; technicals remain upbeat

August 15, 2014 - 12:00:00 am

Doha: Qatar’s index, which had climbed 1.8 percent in active trade to a 10-week peak on Wednesday, fell 0.1 percent yesterday as volume shrank slightly. Its close of 13,505 points means it is still up 17.5 percent from June 30.

“Sharp moves are inevitable due to low liquidity on many of the names,” said Ali Adou, portfolio manager at The National Investor. “Over the next five years, there is a good upside in Qatar. Some of the banks are attractive but you have to be very selective.”

Aside from hopes that Saudi Arabia will return its ambassador to Qatar following an earlier spat over Doha’s foreign policy, traders offered little explanation for the recent surge and instead turned to technical analysis.

“The market is bullish and any close over 13,650 could stretch the rally to 13,800-13,900 in the short term,” said Shiv Prakash, a senior technical analyst at NBAD Securities. “If the market struggles to push over 13,650, then we may witness mild profit-taking. The support at 13,200 will ignite buying again.”

Mesaieed Petrochemical closed 5 percent higher after MSCI said it had added the stock to its MSCI All-Country World Index. Earlier in the day, it rose as much as its 10 percent daily limit.

Loss-making Vodafone Qatar, which jumped 7.9 percent on Wednesday, slipped 1.0 percent to 21.18 riyals on Thursday, trimming its 2014 gains to 98 percent. That surge has left the stock looking overpriced — all six analysts surveyed rate it a “sell” or “strong sell”, with a mean price target of 14.10 riyals.

“The company recently launched post-paid services,  which provide higher per-subscriber revenue, and it has also increased its market share. But there’s nothing in Vodafone Qatar’s fundamentals that would justify such a share price increase,” said Shrouk Diab, NBK Capital’s assistant vice-president.

Vodafone Qatar is also benefitting from Qatar’s rising population as more foreign workers move to the country to work on its massive infrastructure projects, although estimates of the extent of this increase vary.

Meanwhile, banks lifted Abu Dhabi’s share index to a near 10-week high, while financial stocks were also the main gainers as Egypt’s benchmark rose for a ninth trading day in ten.

Cairo’s main index rose 1.1 percent to a six-year high of 9,387 points; it is up 89 percent since the army deposed former president Mohamed Mursi in July 2013.