Friday 20 April 2018

Qatar may rebound after FTSE move; UAE could rise more

Dubai, June 22, 2014

Qatar's bourse may rebound on Sunday after two of its leading stocks slid in the last session because of a rebalancing of the FTSE frontier market index.

Meanwhile, markets in the UAE could continue their cautious recovery after the former chief executive of Dubai builder Arabtec said on Thursday that he would not sell his large stake in the company.

Shares in Qatar National Bank and Industries Qatar fell 3.8 and 1.5 per cent respectively on Thursday ahead of the weekend's rebalancing of the FTSE frontier market index, in which the two are the heaviest components. Qatar's main index slid 1.1 per cent as a result.

But the history of other global index changes suggests most funds will have moved on Thursday, so selling is unlikely to remain heavy on Sunday.

Also, only a relatively small amount of funds is benchmarked to the FTSE frontier index - much smaller than to the MSCI emerging markets index, for example - so the overall impact of the rebalancing is not expected to be large.

FTSE removed seven stocks from its index and added another seven, including Argentinian energy giant YPF, on June 20. The index compiler has not publicly released the new weightings for stocks in the index, but fund managers believe the weightings of Qatari stocks would have declined slightly.

Dubai's bourse, which rose 1.6 percent on Thursday even as Arabtec Holding, its most heavily traded stock, slipped 0.9 percent, could get some support from Arabtec on Sunday after the construction firm's former chief executive Hasan Ismaik told Reuters he would not sell his stake in the company.

Ismaik, who quit last week, is Arabtec's largest shareholder with a stake of 28.85 percent and investors have been concerned it could end up on the market. "I will keep it," Ismaik said when asked about the stake. "I am an investor. I believe in the company, Arabtec has great potential."

However, given continued uncertainty about the company's future - major shareholder Aabar has not commented on its plans - any rebound may be minor.

The recovery by Abu Dhabi's bourse late last week was led by blue-chip banks such as Abu Dhabi Commercial Bank and National Bank of Abu Dhabi.

Shares in two local firms that have operations in Iraq's Kurdistan region, Abu Dhabi National Energy Company and Dana Gas, also rose on Thursday, though they may remain volatile as heavy fighting in Iraq continues.

The global backdrop is positive as U.S. equities rose on Friday for a sixth straight session, hitting new highs on hopes that U.S. policymakers will keep a lid on interest rates through 2016.-Reuters

Tags: Qatar | stocks | FTSE |

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