Weekly Market Report

The Qatar Exchange (QE) Index gained 189.38 points, or 2.09%, during the week, to close at 9,238.00 points. Market capitalization rose by 1.61% to reach QR510.0 billion (bn) as compared to QR501.9bn at the end of the previous week. Of the 42 listed companies, 29 companies ended the week higher, 9 fell and 4 remained unchanged. Gulf International Services (GISS) was the best performing stock with a gain of 15.20%; the stock is up 56.67% year-to-date (YTD). Qatar Islamic Insurance (QISI) was the top decliner, down 3.33%; the stock is down 6.45% YTD.

GCC markets posted positive returns across the board during May 2013 with Kuwait leading the pack. The benchmark Kuwaiti index gained 11.7% (+39.9% YTD). The second best performing market was Dubai with a gain of 10.8% (+45.9% YTD) followed closely by Abu Dhabi with a gain of 8.8% (+35.4% YTD). Other regional indices also posted decent gains (in the range of 3.1% to 8.4%) for the month of May 2013.

Qatar’s equity market also enjoyed strong gains with the QE Index ascending by 6.5% in May 2013 (+10.5% YTD). QNB Group (QNBK) was the biggest contributor (24%) to the index gains; the stock gained 10.67% in the month of May 2013. Furthermore, QNBK was the top pick of foreign institutions with net buying of 1.61mn shares, followed by GISS and Masraf Al Rayan (MARK) with 1.32mn shares and 1.20mn shares, respectively. On the other hand, non-Qatari institutions sold, on a net basis, 1.69mn shares of Mazaya Qatar Real Estate Development (MRDS), 1.40mn shares of Al Khalij Commercial Bank (KCBK) and 0.93mn shares of Dlala Brokerage and Investments Holding (DBIS). We continue to expect a pickup in domestic retail interest and believe improved liquidity in the banking sector will be a positive for the market. According to April 2013 banking system data released by the Qatar Central Bank, deposits expanded by 7.4% month-on-month or MoM (+14.2% YTD) while loans increased by 2.7% MoM (+4.2% YTD). Hence, the sector LDR dropped to 102% in April 2013 versus 106% at the end of March 2013 (111% in December 2012). Furthermore, the domiciled loan-to-deposit ratio (LDR) for the sector followed suit and stood at 94% versus 99% in March. Liquidity has materially improved from the second quarter of 2012 (current LDR of 102% versus the 2012 high of 124% in April). We forecast loan growth of about 15-20% for 2013. However, we expect NIMs to remain under some pressure throughout the first half of 2013.

Equity trading value during the week declined by 0.45% to reach QR1,893.3 million (mn), as compared to QR1,901.8 in the prior week. The Banks & Financial Services sector led the trading value during the week, accounting for 28.97% of the total equity trading value.

Equity trading volume, on the other hand, increased by 1.82% to reach 56.1 million shares, as against 55.1 million shares in the prior week. The number of transactions fell by 10.70% to reach 24,743 transactions versus 27,708 transactions in the prior week. The Real Estate sector led the trading volume, accounting for 37.38% of the total volume.

Foreign institutions turned bullish for the week with overall net buying of QR25.2mn versus net selling of QR6.7mn in the prior week. Qatari institutions turned bullish with net buying of QR45.1mn versus net buying of QR150.2mn in the prior week.