Qatar index rises to 27-month high
Doha , May 13, 2013
Qatar's bourse rose to a 27-month high on Monday as regional investors bought a market considered a bargain because it has lagged others in the Gulf this year.
Most Gulf markets climbed, although Saudi Arabia's bourse extended declines as the prospect of stricter capital market regulation spooked investors.
Qatar's underperforming market has seen a surge in institutional buying over the last few weeks as investors look for value after strong 2013 gains elsewhere.
"At this stage you have little choice in the region for investment opportunities after the rally in the UAE, Kuwait and Saudi consumer names - Qatar is a good candidate," said Ali Adou, portfolio manager at The National Investor.
"Investors are rotating out of UAE banks that saw a big surge this year and are buying Qatar names. Banks are trading at attractive valuations."
Attractive equity yields in Qatar are also a draw. Doha's benchmark advanced 0.6 percent to its highest level since February 2011.; the market is up 7.4 percent year-to-date, but considerably behind the roughly 30 percent gains recorded by markets in the United Arab Emirates and Kuwait.
Authorities on Sunday officially postponed the planned initial public offer of Doha Global Investment Co, a $12 billion investment company backed by assets from the Gulf state's sovereign wealth fund.
The announcement may keep local retail investors on the sidelines as they await the subscription period. No specific date for the IPO has been set, and the delay had no apparent effect on Monday's trade since many market participants had expected it.
UAE MARKETS GAIN
In the United Arab Emirates, the two main markets extended gains to hit fresh multi-year highs.
Sentiment in Dubai is buoyed by strong tourism numbers and a pick-up in the property market after a long downtrend triggered by the 2008 financial crisis.
Air Arabia slipped 0.9 percent but is up 11.3 percent in April on hopes of strong quarterly earnings growth. After the close, the budget carrier posted a 20 percent rise in first-quarter net profit.
In Kuwait, the index gained 0.3 percent to hit a fresh 43-month high in strong turnover as hopes for an economic recovery drove momentum. Volumes were focused in small-caps but heavyweight banks also rose.
"The market seems to be self-fuelling its flight towards an astounding recovery from the financial crisis and following the Arab Spring challenges," said Fouad Darwish, head of brokerage services at Global Investment House.
But Saudi Arabia's bourse fell 0.5 percent, extending declines since climbing to a four-week high on Saturday. The Capital Market Authority on Sunday said it would limit shares' volatility on their first day of trading to 10 percent.
It is also considering placing more stringent limits on accumulated annual losses for stocks before they are suspended.
"The new management of CMA has started their work to enhance the market overall - expect a few more changes," said Mohammad Omran, an independent financial analyst in Riyadh. "These initiatives will try to organise the practices in the market and move it away from illegal and speculative trading."
Monday's selling focused on stocks that tend to move on speculation, and Omran said the overall market's decline was not as severe as expected.
The insurance sector fell 4.5 percent, its largest one-day drop in four weeks. The agriculture and food shares index lost 0.8 percent.
In Egypt, the measure retreated 0.5 percent, easing away from Sunday's 10-week high with some across-the-board profit-taking. - Reuters