Fed rate hike expectations have dampening effect on QSE

Expectations on a rate hike by the US Federal Reserve and slow expansion in the domestic economy had their dampening effects on the Qatar Stock Exchange (QSE), which lost 185 points in index and QR10bn in capitalisation during the week.
Large and midcap equities were found fast losing their sheen on the QSE, whose key 20-stock barometer lose 1.64% during the week, which, otherwise saw FTSE Russell indicate 21 local stocks eligible to be included under its global equity index when it upgrades Qatar next month into emerging markets.
The weak run on the QSE was rather reflective of the overall sentiments in the region as Saudi Arabia shrank 4.02%, Dubai (2.25%), Muscat (1.21%), Kuwait (0.79%) and Bahrain (0.28%); while Abu Dhabi was up mere 0.03% during the week, which saw global credit rating agency Moody’s say that the Gulf sovereigns will remain under stress over the medium term, notwithstanding the recent rebound in oil price, which has risen partly driven by technical and temporary supply disruptions.
“The market was, by and large, swayed by extraneous factors (expectations build up on the US Fed rate hike) but (Qatar’s first quarter) weak gross domestic product number had a mild effect on the last day and whose effect is likely to persist over the coming week,” an analyst with a brokerage house said.
Telecom, transport and industrials witnessed higher than average net profit booking during the week which featured a BMI report that said Qatar, whose budget will turn back to surplus in 2017, will remain in one of the strongest fiscal positions in the world over the next decade and continue to hold massive financial buffers through its sovereign wealth fund.
The Qatari bourse has gained 6.76% year-to-date compared to 10.83% in Dubai, 7.71% in Muscat and 4.94% in Abu Dhabi; whereas Saudi Arabia fell 13.53%, Bahrain (5.77%) and Kuwait (3.32%).
Foreign institutions’ weaker buying support had its overarching influence in the market during the week, which saw Moody's upgrade Masraf Al Rayan's long term issuer ratings to A1 from A2 and Counterparty Risk (CR) Assessment to 'Aa3(cr)' from 'A1(cr)'.
However, selling pressure of local retail investors and domestic institutions considerably weakened during the week which witnessed A M Best, an international insurance rating agency, affirm Doha Insurance Company's financial strength rating at 'A- (Excellent)' and the issuer credit rating at ‘a-‘, both with "stable" outlook.
Opening the week weak at 11,298 points, the market kept sliding for the next two days to touch a lowest of 11,116 points on Tuesday, after which the market turned positive; but only to see profit booking on the last day and thus settle at 11,335 points.
The 20-stock Total Return Index shed 1.64%, All Share Index (comprising wider constituents) by 1.5% and Al Rayan Islamic Index 1.09% during the week which saw total trading turnover and volumes on the decline.
Telecom stocks tanked 4.08%, transport (2.13%), industrials (2.12%), banks and financial services (1.6%), insurance (1.37%) and consumer goods (0.69%); whereas real estate rose 0.11% during the week which saw banking, industrials, realty and telecom stocks together constituted more than 85% of the total trading volume.
Market capitalisation eroded 1.63% to QR595.48bn as large, mid, micro and small cap equities lost 2.04%, 1.78%, 1.4% and 0.35% respectively during the week which saw Masraf Al Rayan dominate the trading ring in terms of volume and value.
Large, micro and midcap stocks have gained year-to-date 6.73%, 4.94% and 0.52% respectively; while small caps fell 1.32%.
Of the 44 stocks, as many as 38 declined, while only four advanced and two were unchanged during the week.
All of the 13 banks and financial services; eight of the nine industrials; six of the eight consumer goods; four of the five insurers; three of the four realty; and two each of the telecom and the three transport stocks closed weaker during the week.
More than 86% of the scrips extended gains with major shakers being Qatar Electricity and Water, Ooredoo, Al Khaliji, Doha Bank and Doha Insurance; whereas Ezdan, Qatari Investors Group, Qatar General and Reinsurance and Qatar Cinema were seen bucking the trend during the week.
Foreign institutions’ net buying weakened perceptibly to QR101.38mn against QR629.96mn the week ended August 18.
However, domestic institutions’ net profit booking plummeted to QR105.1mn compared to QR319.14mn the previous week.
Local retail investors’ net selling also declined considerably to mere QR5.82mn against QR240.16mn the week ended August 18.
Non-Qatari individual investors turned net buyers to the tune of QR9.46mn compared with net sellers of QR70.66mn the previous week.
Total volume fell 60% to 19.86mn shares, valued by 62% QR808.47mn and transactions by 44% to 15,852 during the week.
The transport sector reported 68% plunge in trade volume to 1.11mn equities, 70% in value to QR44.21mn and 54% in deals to 967.
The banks and financial services sector’s trade volume plummeted 66% 5.16mn stocks, value by 71% to QR235.75mn and transactions by 50% to 4,242.
The real estate sector saw 65% shrinkage in trade volume to 3.96mn shares, 64% in value to QR82.11mn and 44% in deals to 2,218.
The insurance sector’s trade volume tanked 60% to 0.66mn equities, value by 58% to QR56mn and transaction by 57% to 627.
There was 59% slump in the consumer goods sector’s trade volume to 1.16mn stocks, 57% in value to QR67.47mn and 44% in deals to 1,293.
The industrials sector’s trade volume declined 54% to 4.16mn shares, value by 52% to QR207.38mn and transactions by 39% to 3,939.
The telecom sector’s trade volume shrank 47% to 3.65mn equities, value by 45% to QR115.54mn and deals by 28% to 2,566.
In the debt market, there was no trading of treasury bills and government bonds during the week.