Qatar stocks crash on MSCI concerns oil worries

(MENAFN- The Peninsula)

By Satish Kanady

DOHA: Shares in Qatar stock market tumbled on concerns over MSCI rebalancing and oil worries yesterday. Sparked by foreign institutional investors’ sell-off the benchmark index plunged 4.38 percent or 462.65 points to finish at 10090 the worst loss in two years.

Gulf International which will be deleted from the MSCI Emerging market index from today tanked 9.44 percent. Yesterday’s market crash wiped out QR23bn in market capitalisation. The market is 17.87 percent down on year-to-date. Traders cited outflows of funds due to changes in MSCI’s emerging market index and concern about the impact of low oil and gas prices on the local economy Reuters reported.

“Most initial selling today was influenced by the MSCI rebalancing act. But last 10 minutes’ heavy selling doesn’t explain this. Because it was not only related to those stocks whose MSCI index weight was changed” Afa Boran Head of Asset Management Amwal told The Peninsula. The market witnessed a steep fall in the last five minutes he added.

Although liquidity in the Middle East has improved the regional markets remain extremely exposed to global capital flows. Oil is also very important for Qatari stocks said another analyst.

Qatar Exchange’s (QE) monthly data released yesterday said the benchmark index declined 13.04 percent in November. Market cap fell by 12.40 percent suggesting the evaporation of QR76bn from the market at the end of November. By plunging 6.84 percent real estate was the worst hit sector index yesterday. Barwa and UDC were hammered by 9.52 percent and 8.14 percent respectively.

Among the banking stocks Commercial Bank shed 6.04 percent and Masraf Al Rayan lost 5.93 percent while QNB fell 5.33 percent. Doha Bank bucked the trend and jumped 7.69 percent.

Qatar Electricity and Water which announced the signing of an agreement with Nibras Energy regarding the acquisition of stake in AES Oasis Limited shares in Amman East Power Station Jordan declined 6.70 percent.

According to Reuters report Index compiler MSCI was due to add overseas-listed Chinese companies to its emerging market index after the close yesterday; EFG Hermes calculated in mid-November that by diluting Qatar’s weighting in the index this would suck $92m from the Qatari market.

That is not a large amount compared to Qatar’s market capitalisation of $155bn but selling of stocks by passive funds in line with the MSCI rebalancing was met by an absence of buying interest the traders said. Buying support has weakened because of concern about the impact of low energy prices on Qatari state finances and tightening banking sector liquidity.

Elsewhere UAE stocks were also exposed to the MSCI rebalancing. Abu Dhabi’s index climbed 1.5 percent as Etisalat which was joining MSCI’s emerging index jumped 10 percent and was the most active stock. Investors had already bought in anticipation but some passive funds tend to move only on the last day before index changes.

Egypt’s index sank 1.9 percent to 6357 points approaching technical support on the November low of 6302 points. Dubai rose 0.4 percent but Emaar Properties dropped 1.0 percent. The Saudi stock index eased 0.2 percent.

The Peninsula