(MENAFN- The Peninsula) On a day it resumed trading after long holidays, Qatar stock market hit hard as entire stocks got hammered yesterday. A whopping QR19bn wiped off from the market as it took cue from global market trends and plunged 3 percent, or 414 points, to finish at 13,416.
Stocks dragged steeply down throughout the day on heavy sell-off by foreign institutional investors and local retailers. The real driver of the downfall was blue chips. A sharp decline in all sectoral indices dragged the market down. Telecoms, real estate and banking stocks were the worst hit. Ooredoo tumbled 4.36 percent as Vodafone down by 4.20 percent. Ezdan, which got entry into the benchmark index this month, lost 4.03 percent.
The banking stocks witnessed steep decline, with Masraf Al Rayyan losing the most by 4.66 percent. International Islamic slid 3.46 percent. QNB, which reported a QR8bn net profit for the first nine months yesterday, down 2.45 percent.
"The market decline is mainly due to drop in oil prices in the last few weeks against the backdrop of expensive valuations. Most GCC equity markets fell sharply between 3 percent and 6.5 percent today. In fact, Qatar's 3 percent drop was quite mild compared to other GCC markets - Saudi and Dubai both fell 6.5 percent," Afa Boran, Head of Asset Management, Amwal told The Peninsula.
Another section of analysts attributed the market tanking to the 'global turbulence triggered by the US Federal Reserves' plan to reduce monetary stimulus'.
Yesterday, Qatar bourse was 29.25 percent up year-to-date.
Drop in oil prices has been sharp, declining from the year to date average of $105 to $90 currently per barrel of Brent, Afa added. "While we don't expect the drop so far to have a material impact on near term government spending... it still affects stock market investors' earlier assumptions of wealth accumulation in the region and likely future government spending, which drives corporate profits. We were expecting oil prices to eventually decline to these levels and perhaps more, but the speed is surprising," he said.
Additionally, stock valuations are very high. This is part of the reason for the correction in stock prices, he said.
Total traded volume rose to over 11 million shares from 8 million shares. Total value increased to QR552m from QR435m. The value of banking stocks surged to QR229m from QR185m. The value of industrials stocks jumped to QR134m from QR79m.
Market watchers expect Qatari market will be more stable with the announcement of third quarter results as an array of industrials and banking majors is expected to disclose their third quarter earnings by next week. Analysts have forecasted a better profit growth for more than a dozen listed companies, compared to their previous quarter. Investment bank SICO that covered 11 listed companies in Qatar, estimates a 14.1 percent growth on year-on-year basis.
Analysts at Mubasher Trading yesterday noted foreign investors were net buyers in Qatar in September, with a net trading value of $29m. Nationals dominated the total trading with $4.94bn, representing 65 percent of total trading value during the month.
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