Weekly Market Report

The Qatar Exchange (QE) Index gained 131.72 points, or 1.48%, during the week, to close at 9,048.62 points. Market capitalisation rose by 0.77% to reach QR501.9 billion (bn) as compared to QR498.1bn at the end of the previous week. Of the 42 listed companies, 31 companies ended the week higher, 8 fell and 3 remained unchanged. Qatar Islamic Insurance (QISI) was the best performing stock with a gain of 11.32%; the stock is still down 3.23% year-to-date (YTD). Al Ahli Bank (ABQK) was the top decliner, down 3.51%; the stock is up 12.24% YTD.

Weak manufacturing data from China and Fed Chairman Ben Bernanke’s comments on the eventual winding down of bond buybacks put global markets into turmoil. Japan’s Nikkei Index plunged 7.3% on Thursday (May 23) dragging down other Asian equity markets; a contraction in the HSBC China Manufacturing Purchasing Managers’ Index (index fell to a 7-month low of 49.6 in May versus 50.4 in April) also spooked investors. American and European markets were also volatile as Bernanke signaled that the Fed may curb bond buybacks as soon as June but stressed that he was reluctant to act prematurely or aggressively.

Allaying investors concerns about potential Qatari IPOs. With several high-profile IPOs expected, we believe the Qatari equity market will benefit from potential catalysts. Moreover, concerns about a potential liquidity drain due to these IPOs are overblown, in our opinion. We continue to hypothesise that Qatari banks are flush with liquidity. According to Qatar Central Bank data for the first four months of 2013, deposits ticked up by 14.2% YTD while loans increased by 4.2%. Hence, liquidity in the banking sector has materially improved versus December 2012. We also believe other relevant stake holders will ensure that sufficient liquidity is available and the stream of IPOs will be staggered to assist growth in the market. Our checks indicate that Barwa Bank’s IPO (QR1bn) is imminent over the next few weeks (with the listing possibly delayed after Ramadan) followed by Doha Global Investment (QR11bn). Furthermore, Qatar Petroleum (QP) is set to offer shares of four of its subsidiaries to the public in what could pave the way for resurgence of the country’s equity market.

Equity trading value during the week increased by 8.74% to reach QR1,901.8 million (mn), as compared to QR1,748.9 in the prior week. The Banks & Financial Services sector led the trading value during the week, accounting for 29.57% of the total equity trading value.

Equity trading volume increased by 8.45% to reach 55.1 million shares, as against 50.8 million shares in the prior week. The number of transactions rose by 22.21% to reach 27,708 transactions versus 22,673 transactions in the prior week. The Real Estate sector led the trading volume, accounting for 34% of the total volume.

Foreign institutions turned bearish for the week with overall net selling of QR6.7mn vs net buying of 296.3mn (including t-bills) in the prior week. Qatari institutions turned bullish with net buying of QR150.2mn versus net selling of QR100.7mn (including t-bills) in the prior week.

Gulfbase