Qatar’s main index breached 10,000 points yesterday but a prominent stock analyst warned investors against being overly excited, saying the jump was mainly propelled by a few large-cap shares.
Stocks like those of mega players such as Industries Qatar (IQ), QNB, Woqod (Qatar Fuel) and Al Rayan bank, among others, have been the major drivers of the historic index gain. Other stocks haven’t performed so well as a result of the companies not showing better performance, said the analyst. “Personally I don’t appreciate such index jumps,” Bashir Al Kahlout told The Peninsula. “A gradual rise is always desirable.”
He said a lot of liquidity was flowing into the market but its sources were not clear. “If this is happening now, imagine what happens in December,” said Al Kahlout, hinting the index could breach 15,000 and even 20,000 levels if trading remains so buoyant. A key corporate figure, Nasser Al Khaledy, who earlier predicted the stock rally would continue, in fact, said he expected the index to shoot up beyond the 15,000 points by the first quarter of 2014.
“I don’t foresee a major correction in the near and medium-term,” Al Khaledy, CEO of Qatar-Oman Investment Company, told this newspaper. But Al Kahlout didn’t agree and said a correction might be coming.
MSCI emerging markets status becomes effective in respect of Qatar Exchange (QE) in May 2014, but its impact is visible from now as foreign institutional investors (FIIs) have begun taking positions much ahead of the timeframe, Al Khaledy suggested.
In fact, the QE achieved another major feat yesterday as its market capitalisation, or investors’ wealth, crossed the magical barrier of $150bn (QR548.5bn).
As for the index gain, the record was created in early April of 2005 when it soared to 11,148.30, after the market (then known as the Doha Securities Market ) was for the first time thrown partly open to foreign capital.
Yesterday, it closed at 10,006.36 with a 92.52 points gain that worked out less than one in percentage terms.
Al Khaledy said liquidity flow into the QE slowed down due to the expectations of the mega initial public offering (IPO) of Doha Global Investment Company that was announced earlier.
However, when the primary offer was put off the liquidity flow resumed, he said talking of Qatari investors, both retail and corporate. “The FIIs are now complementing the flow.”
Asked if it wasn’t surprising that the index had breached the record in the summer months and right after the end of Ramadan when stock trading is usually subdued, Al Khaledy said this Ramadan was different since people were all here and tracking their businesses and investments in the night time.
But not so much excited, Al Kahlout said those few large-cap stocks could keep rallying so one shouldn’t be surprised if the index crosses the 15,000 points sooner than expected.
Source:The Peninsula
