QE in correction mode; foreign investors turn bearish

June 20, 2014 - 12:18:11 am

By Satish Kanady

DOHA: Triggered by a broader sell-off, Qatar stocks saw one of its biggest weekly pull backs of the year yesterday. The bourse’s main index lost 525.10 point to close at 12,453, down 4.05 percent, for the week. The investors lost QR24bn last week as the market cap fell sharply by 3.34 percent to QR681bn at the end of the week from the previous week’s QR705bn.

Shares in Ooredoo, which has operations in Iraq, tumbled 11.8 percent, making it the biggest loser among the top stocks on QE in the past week. Yesterday, the index ended the day down 1.09 percent. The weekly pull back was triggered by brisk sell-off by local individual investors and foreign institutions amid strong buying interest from retail investors.

Analysts downplayed ‘Iraq conflicts’ and found more reasons in local cues for the pullback. 

“After hitting historical highs some 10 weeks ago, the market continued to maintain its uptrend on various positive sentiments including, the excitement on MSCI upgrade, Qatar’s record budget allocations and the dividend season. Those excitements are over now. The investors feel that there are no more reasons for the market go further high,” market analyst Bashir Yousef Kahloud told The Peninsula.

The Advisory Council’s decision to reject a proposal by the government to exempt foreign investors in the local equity market from paying tax on their capital gains and income earned from cash dividends and interests on bonds is another reason for the market retreat, he said.

“The foreign institutional investors, who have been bullish for long is no more the buyers. Even the local institutional investors are buying in smaller numbers. The reported rebalancing of FTSE frontier market index can be another reason for the slowdown”, said another analyst.

Qatar stock is the heaviest component in the FTSE frontier market index, which will undergo a quarterly rebalancing today, agencies quoted Bruce from EFG Hermes as saying. Selling related to the adjustment 

was most likely the main reason for the price drop yesterday, 

he said.

The real estate, telecoms and industrial majors hit the worst during the past week. Bellwether Industries Qatar’s traded value was down by QR26m compared to the previous week. Vodafone’s value dropped to QR153m from QR231m.

Trading value during the past week decreased by 22.08 percent to reach QR3.15bn against the previous week’s QR4.04bn. Trading volume decreased by 33.29 percent to touch 66 million shares. The number of transactions rose by 1.03 percent to reach 46,935 transactions from 46,458.

Of the seven sector indices, all except one finished in red. The telecoms tanked 9.43 percent.

Eleven banking stocks, including the bellwether QNB, edged down. The sector lost 4.49 percent with the International Islamic hitting the worst by 7.01 percent. The sector’s traded value dropped QR1.23bn from QR1.72bn. The real estate sector slipped 5.47 percent and the transportation dropped 2.64 percent. The insurance sector was marginally up by 1 percent.

The Peninsula