Weekly Market Report QNB
The Qatar Exchange (QE) Index declined by 20.00 points, or 0.24%, during the week, to close at 8,483.64 points. Market capitalization rose by 0.41% to reach QR467.6 billion as compared to QR465.7 billion at the end of the previous week. Out of the 42 listed companies, 22 companies ended the week higher, 19 fell and 1 remained unchanged. Ahli Bank (ABQK) was the best performing stock during the week with a gain of 13.27%; the stock is up 21.90% year-to-date (YTD). Zad Holding Company (ZHCD) was the top decliner, down 4.72%; the stock is up 27.37% YTD. Major activity during the week was in Ezdan Real Estate (ERES) with transactions of 232 million shares on the special market.On the international front, the US economy grew by 1.7% in the 2nd quarter of 2012 vs. an earlier estimate of 1.5%. Furthermore, consumer spending in the US climbed in July for the first time in three months. Regional markets, except for Bahrain, finished in the green in August 2012. The Saudi benchmark index led the gains with a strong increase of 3.8%, followed by Kuwait (2.5%), Oman (2.3%), Qatar (2.2%), Abu Dhabi (2.2%) and Dubai (0.3%). On the other hand, Bahrain was only index that declined, losing 1.2% in the month of August. Delving into details, the Saudi index gained 260.82 points during the month to close at 7,139.01 points. We note that contribution to the index’s performance was broad based with the top-10 movers making up close to half of the overall increase. Resilience in oil prices amid increasing hopes of further stimulus abroad and continued positive performance of the banking sector helped the Saudi market, in our view. In Qatar, Industries Qatar (IQCD) was the biggest contributor to the QE Index’s performance. IQCD posted a strong top-line of QR4.7bn for the June quarter, up 8% sequentially due to robust petrochemical and fertilizer revenue; improving oil prices also kept investors interested in the stock. The July transfer of 104.5mn shares from Qatar Petroleum (QP) to the civil and military funds of the General Retirement and Social Insurance Authority has allowed IQCD’s foreign ownership limit, as a percentage of its outstanding shares, to increase to 12.25% from 7.5%. Of the overall top-10 contributors to QE’s performance, five were bank stocks; we continue to expect the Qatari banking sector to post improved results in the coming quarters on the back of strong credit off take. Saudi Arabia was the best performing market for the week as well, with the benchmark Tadawul Index gaining 1.9%. The Saudi market was closed during the entire prior week and was thus playing catch up to the international and regional markets.Equity trading value during the week was QR5,799.9 million. The Real Estate sector, primarily due to ERES, led the trading value during the week, accounting for 81.73% of the total equity trading value. Equity trading volume during the week was 262.0 million shares. The number of transactions was 18,467. The Real Estate sector led the trading volume as well, accounting for 90.51% of the total equity trading volume. Qatari Institutions bought QR11.0 million worth of equities, while foreign institutions sold QR11.0 million in equities. Overall, Qatari institutional and individual investors were net sellers of equities of QR19 million, while non-Qatari investors were net buyers.
Definitions of key terms used in technical analysisRSI (Relative Strength Index) indicator – RSI is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between 0 to 100. The index is deemed to be overbought once the RSI approaches the 70 level, indicating that a correction is likely. On the other hand, if the RSI approaches 30, it is an indication that the index may be getting oversold and therefore likely to bounce back. MACD (Moving Average Convergence Divergence) indicator – The indicator consists of the MACD line and a signal line. The divergence or the convergence of the MACD line with the signal line indicates the strength in the momentum during the uptrend or downtrend, as the case may be. When the MACD crosses the signal line from below and trades above it, it gives a positive indication. The reverse is the situation for a bearish trend. Candlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The ‘body’ of the chart is portion between the open and close price, while the high and low intraday movements form the ‘shadow’. The candlestick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis.Doji candlestick pattern – A Doji candlestick is formed when a security’s open and close are practically equal. The pattern indicates indecisiveness, and based on preceding price actions and future confirmation, may indicate a bullish or bearish trend reversal.
The QE Index witnessed a fourth consecutive Thursday jump after sideways-to-lower price movement during the week.
The weakness seen for most of last week brought the index close to its support at the 8,416.83 level (May 31 close), which is also in proximity to the 21-day moving average (currently at 8,412.25). If these levels are broken, we could witness a correction toward the bullish trend line that is also in proximity to the 55-day moving average (currently at 8,315.31). If the index does move below that level, it could act as a confirmation of a downtrend with a likely target toward the 8,216.18 (June low) and 8,123.02 (July low) levels, respectively. On the other hand, if the index stays above 8,416.83 then the uptrend is still intact, in our view. Moreover, the resistance area between the 8,510.0 and 8,540.0 levels needs to be broken in order to keep the rally alive. Beyond that, there is little resistance until the 8,700.0 level. We note our short-term momentum indicators are mixed, which portends a near-term sideways choppy movement in the index. Therefore, we believe this week’s price action should be used as a gauge – a rise above 8,540.0 would indicate a breakout and continuation of the uptrend that began in July, while a drop below 8,416.83 signals further downside (potentially toward the 55-day moving average).