Bull run continues after Fed decision on stimulus

By Santhosh V Perumal/Business Reporter

Discounted fears over Syrian crisis and the US Federal Reserve’s surprise move to continue with the stimulus package lent optimism to investors in the Qatar Exchange (QE) amid lower liquidity during the week.

More than 90% of the traded stocks rose and capitalisation was enhanced by about QR12bn as the bourse remained under bullish spell in the week that saw QE announce that Al Meera and Qatar Insurance will replace al khaliji and Mazaya Real Estate Development Company in the 20-stock Qatar Index from October 1.

In a statement after a policy meeting, the Fed said it has not set any timetable for reducing the stimulus package as it depends on how the economy performs, although the markets were expecting a slight cut in the central bank’s $85bn in monthly bond purchases.

Markets have already discounted fears over US strikes on Syria and that is one of the major positives, analysts said, adding the US Fed decision could at best be treated as a secondary reason.

Both domestic and foreign institutions were seen to extend the bullish momentum to the 20-stock Qatar Index, which closed 2.61% higher in the week that also saw QE announce enhancement to its data services by incorporating real-time update to its order book through website.

The index that tracks Shariah-principled stocks underperformed the other major benchmarks in the week that featured global credit rating agency Standard and Poor’s (S&P) say that Qatar’s Islamic banks may increasingly resort to debt raising, in view of Basel III regulations.

Although there was an across-the-board buying, telecom, realty and transport counters outperformed the market in the week that saw global credit rating agency S&P forecast that Qatar’s Islamic banks’ assets were set to exceed $100bn by 2017.

The market liquidity was down, especially due to lower volumes in insurance, industrials and telecom sectors, although overall liquidity was skewed towards the real estate and banking sectors in the week.

The 20-stock Total Return Index also surged 2.61%, All Share Index (comprising wider constituents) by 2.38% and Al Rayan Islamic Index by 1.91% in the week that witnessed Qatar Industrial Manufacturing Company sign a contract with Hill International Company to manage the design stage of its tower project to be built at an estimated cost of QR500mn.

Of the 42 stocks, 37 advanced; while only four declined and one was not traded in the week that witnessed Qatar’s cost of living, as measured by consumer price index, remain unchanged in August from the previous month.

Major gainers included QNB, Commercial Bank, Doha Bank, Masraf Al Rayan, al khaliji, Industries Qatar, Gulf International Services, United Development Company, Barwa, Mazaya Qatar Real Estate Development, Ooredoo, Nakilat and Milaha; even as Qatari Investors Group and Salam International Investment bucked the trend.

Telecom stocks appreciated the maximum of 4.14%, followed by realty (3.57%), transport (3.34%), consumer goods (2.16%), banks and financial services (2.12%), industrials (2.01%) and insurance (1.34%) in the week.

Eleven of the 12 banking, seven of the eight consumer goods, six of the eight industrials, four each of the five insurers and the four real estate and all of the two telecom and the tree transport stocks closed higher in the week.

Market capitalisation swelled 2.21% to QR537.35bn.

Foreign institutions turned bullish that they were net buyers to the tune of QR57.13mn compared with net sellers of QR21.44mn the week ended September 12.

Domestic institutions also turned bullish that they were net buyers to the extent of QR18.58mn against net sellers of QR26.03mn the previous week.

However, Qatari individual investors turned profit-takers as they were net sellers to the tune of QR46.09mn compared with net buyers of QR5.10mn the week ended September 12.

Non-Qatari retail investors were also bearish that they were net sellers to the tune of QR29.62mn against net buyers of QR42.37mn the previous week.

Indicating lower liquidity, total trading volume was down 2% to 42.98mn shares with the realty sector accounting for 33.92%, banks and financial services (26.69%), consumer goods (11.73%), transport (11.49%), industrials (11.12%), telecom (4.23%) and insurance (0.81%).

The insurance sector’s trading volume plummeted 48% to 0.35mn shares, industrials by 17% to 4.78mn, telecom by 14% to 1.82mn and real estate by 4% to 14.58mn; while banks and financial services’ gained 7% to 11.47mn, consumer goods by 6% to 5.04mn and transport by 5% to 4.94mn.

Reflecting better expected prospects, total stocks trading value rose 3% to QR1.75bn with the banking and financial services sector stocks constituting 29.89% of the total, followed by industrials (22.21%), real estate (17.88%), consumer goods (15.55%), transport (9.17%), telecom (4.15%) and insurance (1.15%).

The consumer goods sector’s trading value surged 15% to QR272.47mn, banks and financial services by 14% to QR523.80mn, transport by 12% to QR160.71mn, telecom by 12% to QR72.78mn and realty by 1% to QR313.37mn; whereas industrials’ fell 14% to QR389.30mn.

IQ accounted for 14.05% of total stocks trading value, followed by UDC (12.60%) and QNB (7.98%).

Total market transactions shrank 4% to 20,590 deals with the banking and financial services sector’s share at 27.04%, industrials (20.78%), real estate (19.75%), consumer goods (15.3%), transport (10.76%), telecom (4.48%) and insurance (1.9%).

The insurance sector’s transactions fell 36% to 392; telecom by 32% to 922; industrials by 11% to 4,278 and banks and financial services by 3% to 5,567; whereas transport’s gained 15% to 2,215; consumer goods by 4% to 3,150 and real estate by 2% to 4,066.

In the debt market, there was no trading of treasury bills and bonds.