The Qatar Exchange (QE) Index lost 290.13 points, or 2.94%, during the week, to close at 9,580.77 points. Market capitalisation decreased by 2.85% to reach QR522.0 billion (bn) as compared to QR537.4bn at the end of the previous week. Of the 42 listed companies, 8 companies ended the week higher while 32 fell and 2 remained unchanged. Qatar German Co. for Medical Devices (QGMD) was the best performing stock with a gain of 1.57%; the stock is up 8.80% year-to-date (YTD). United Development Co. (UDCD) was the worst performing stock with a decline of 4.50%; the stock is still up 19.10% YTD.
The Qatari market underperformed other regional indices during the week. While most regional markets did receive a boost from the US Fed’s decision to delay its tapering programme, the QE Index came under some pressure. Announcement of the upcoming IPO arrested market momentum.
We remain positive on the Qatari equity market in the long term and recommend investors accumulate fundamentally strong equities on dips. We realize that Qatari stocks remain exposed to exogenous events and the market has also experienced a net outflow of foreign portfolio investment to the tune of approximately QR360 million (mn) in the last few weeks (YTD foreign portfolio investment peaked at QR2.7bn as recorded on August 05, 2013 versus QR2.3bn as of September 26, 2013). However, we believe the following catalysts will provide a boost to the stock market in the medium term. These include: 1) the upcoming earnings season and anticipation of cash dividends from blue-chip companies; 2) Qatar’s inclusion in the MSCI Emerging Markets Index in the middle of 2014 and 3) relative catch-up with the QE Index lagging other major regional indices despite offering compelling dividend yields and attractive valuation.
Trading value during the week decreased by 17.39% to reach QR1.4bn vs. QR1.8bn in the prior week. The Industrials sector led the trading value during the week, accounting for 40.75% of the total equity trading value.
Trading volume decreased by 36.38% to reach 27.3 million (mn) shares vs. 43.0mn shares in the prior week. The number of transactions fell by 23.89% to reach 15,672 transactions versus 20,590 transactions in the prior week. The Banks and Financial Services sector led the trading volume, accounting for 27.7% of the total.
Foreign institutions turned bearish for the week with net selling of QR103.7.1mn versus net buying QR57.1mn the prior week. Non-Qatari individuals were net buyers of QR55.6mn versus net selling QR29.6mn in the prior week. Finally, local institutions were net buyers of QR67.5mn versus QR18.6mn the week before.