(MENAFN- The Peninsula)
By Satish Kanady
DOHA: The Qatar Exchange (QE) 20 index was the best performing index in the GCC in July, jumping by 7.3 percent on month-on-month. Saudi (-3 percent), which declined 10 out of 16 sessions, was the lone GCC loser for the month.
By rising 7.3 percent for the first time since mid-May, QE breached the 10,000-point mark. This was aided by trading resuming after Eid holidays. In the first week of July, the Real Estate market witnessed a robust triple digit growth in terms of total transaction value despite Eid holidays.
The combined market capitalisation of QE-listed companies increased 7.5 percent to $131bn in July from $121.9bn in June. The market capitalisation of the top 10 listed companies increased 7.8 percent.
Qatar";s market breadth was understandably positive as 39 names gained ground, while 5 companies saw an erosion in their share prices. The move up was mostly supported by the Real Estate index, which went up by 8.5 percent for the month, followed by Telecoms, which went up by 7.9 percent. Banks and Financial services index also gained by 7.1 percent in July on month-on-month, KAMCO analysts noted.
According to the analysts Qatari market did well after KAMCO";s last analysis, breaking above the upper-end of the 2-years descending trend line and eroding both 10-weeks and 50- weeks moving averages.
'This should be enough to attract further upward potential towards the resistance level at 10,900 point and maybe more to 11,200 point. On the counter side, it is not surprised to see some weaknesses on the short-term period but would be more likely for accumulation purposes as the overall picture remains positive; however, back below the support level at 10,000 point will change the tone.”
'Both weekly and daily RSI (relative strength index) indicators are currently leaning more towards the bulls. Medium-term investors can stay in the market as long as the index closes above 10,000 point, while long-term investors can only enter above 10,900 point.”
On the GCC equity markets, the KAMCO research analysts said the markets shunned the prolonged weakness in the oil market during July as a majority of the exchanges in the oil-dependent region posted positive returns during the month. Oil declined to new yearly lows during the month on the back of inventory build-up and a threat of rising oil supply which had its fair share of impact on Saudi Arabia. However, the remaining markets posted positive monthly returns of as high as 7.3 percent as seen in the case of Qatar driven primarily by earnings momentum.
The Q2-16 earnings season saw the regional banks reporting upbeat earnings despite economic woes due to the decline in oil earnings, which, according to S & P, would result in a combined fiscal deficit of $ 100bn or 9.2 percent of GDP in 2016 for the GCC. Banking earnings improved by more than 4 percent q-o-q by as most of the regional banks posted positive earnings growth during the quarter.
On the global front, trading activity and markets improved during the month on the back of positive economic indicators in the US, a stabilizing commodity market globally (excluding oil) as well as positive Q2-16 economic growth in China indicating a favorable economic outlook, although the growth was fueled by higher state spending vis-à-vis private investment.
Trading activity in the GCC took a hit during July-16 primarily due to the Eid holidays. Monthly volume and value traded on GCC exchanges declined by almost a third for most markets that was partially offset by improvement in average daily value traded on Dubai and Qatar exchanges during the month as compared to June 2016. The earnings would continue determine the course of the GCC markets during August.
The Peninsula