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Weekly Market Report

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  • 1. 10,336.13 10,310 20,000,000 Qatar (QE)* Dubai Abu Dhabi Saudi Arabia Kuwait Oman Bahrain Close 10,283.00 2,891.16 3,831.78 8,337.78 7,841.40 6,772.48 1,201.70 WTD% MTD% YTD% 0.7 2.3 1.0 0.2 (0.8) 0.2 (0.2) 4.5 (1.1) (0.4) 3.6 (1.3) 1.5 (0.0) 23.0 78.2 45.6 22.6 32.1 17.6 12.8 10,283.00 10,240 0 17-Nov 18-Nov 19-Nov 20-Nov Volume QE Index Week ended Nov 14, 2013 1,888.9 553,188.4 549,780.1 0.6 82.0 55.6 47.4 35,140 26,689 31.7 42 42 0.0 23:18 Value Traded (QR mn) 29:12 – Exch. Market Cap. (QR mn) Volume (mn) Number of Transactions Companies Traded Market Breadth Market Indices Close Total Return 14,692.05 All Share Index 2,565.09 Banks/Financial Svcs. 2,438.28 Industrials 3,368.19 Transportation 1,883.42 Real Estate 1,981.64 Insurance 2,343.61 Telecoms 1,457.17 Consumer 5,988.93 Al Rayan Islamic Index 2,980.89 Market Indices Weekly Index Performance WTD% 0.7 0.6 0.1 0.3 1.2 4.9 (0.7) 0.9 1.4 2.0 Chg. % 37.5 MTD% 4.5 4.0 4.3 4.6 2.9 8.7 0.5 1.3 1.7 6.0 YTD% 29.9 27.3 25.1 28.2 40.5 23.0 19.4 36.8 28.2 19.8 2.3% 1.0% 1.5% 0.7% 0.2% 0.2% (1.0%) Weekly Exchange Traded Value ($ mn) 713.09 869.77 441.96 6,292.43 480.67 104.44 10.00 Exchange Mkt. Cap. ($ mn) 151,960.8 69,303.71 110,027.3 452,931.8# 108,474.5 24,119.5 16,705.9 Oman (3.5%) Kuwait (0.2%) (0.8%) Bahrain 4.0% 21-Nov Week ended Nov 21, 2013 2,596.3 Market Indicators The GCC markets were mixed during the week. Dubai‟s benchmark index was the top performer, surging by 2.3% WoW; it is up 78.2% YTD. On the other hand, the QE Index is up 23.0% YTD. With the annual dividend announcement season drawing near and considering the market‟s attractive valuation we expect increased investor interest in the QE over the coming months. Regional Indices Trading suspended on QE on November 19, 2013 10,284.80 Saudi Arabia Foreign institutions remained bullish for the week with net buying of QR195.0mn versus net buying of QR67.8mn in the prior week. Qatari institutions turned bearish with net selling of QR132.7mn vs. net buying of QR103.9mn the week before. Foreign retail investors turned bullish for the week with net buying of QR22.6mn vs. net selling of QR23.0mn in the prior week. Qatari retailer investors remained bearish with net selling of QR85.2mn vs. net selling of QR148.5mn the week before. 40,000,000 10,359.41 Qatar Trading volume increased by 47.43% to reach 82.0mn shares vs. 55.6mn shares in the prior week. The number of transaction rose by 31.66% to reach 35,140 transactions versus 26,689 transactions in the prior week. The Real Estate sector led the trading volume as well, accounting for 38.22% of the total. 10,380 Abu Dhabi Trading value during the week increased by 37.45% to reach QR2.6bn vs. QR1.9bn in the prior week. The Real Estate sector, driven by BRES, led the trading value during the week, accounting for 28.16% of the total equity trading value. QE Index and Volume Dubai Market Review and Outlook The Qatar Exchange (QE) Index gained 70.60 points, or 0.69%, during the week, to close at 10,283.00 points. Market capitalization increased by 0.62% to reach QR553.2 billion (bn) as compared to QR549.8bn at the end of the previous week. Of the 42 listed companies, 23 companies ended the week higher while 18 fell and 1 remained unchanged. Dlala Brokerage & Investments Holding Company (DBIS) was the best performing stock with a gain of 9.51%; the stock is down 29.22% year-to-date (YTD). Islamic Holding Group (IHGS) was the worst performing stock with a decline of 3.15%; the stock is still up 5.13% YTD. Post the announcement of a QR20bn real estate deal with Qatari Diar, Barwa Real Estate Co. (BRES) was the biggest contributor to the QE Index’s weekly gain. The stock contributed 35.9 points to the index‟s weekly gain; BRES is up 8.03% week-over-week (WoW). Qatari Investors Group (QIGD) was the second biggest contributor adding 15.6 points; the stock gained 8.53% WoW. In our view, QIGD‟s stock continues to benefit from improved fundamentals and saw continued appetite from domestic individuals during the week. On the other hand, Gulf International Services (GISS) dragged the index down by 6.2 points WoW on profit taking. We note that the stock has been a significant outperformer almost doubling this year. Industries Qatar (IQCD) also shaved 5.8 points off the index during the week; IQCD is up 18.3% YTD. TTM P/E** P/B** Dividend Yield 13.1 17.1 10.7 17.1 18.1 10.8 8.1 1.8 1.1 1.3 2.1 1.3 1.6 0.8 4.5 3.1 4.7 3.6 3.6 3.8 4.0 # Source: Bloomberg, country exchanges and Zawya (** Trailing Twelve Months; * Value traded ($ mn) do not include special trades, if any) ( Data as of November 20, 2013) Page 1 of 5
  • 2. News Economic News  Qatari house rents rise steadily – According to the consumer price index (CPI) figures released by the Ministry of Development Planning & Statistics, house rents in Qatar have continued to rise due to increasing demand for housing fuelled by rising population. Rent inflation stood at 6.2% YoY by October-end, while the overall consumer inflation was less than half at 2.8%. Food, textiles, home appliances, medical care and entertainment have all become costlier in a year, with food segment rising by 2.6%. The ministry said rising rentals of residential buildings were the main contributing factor for the rise in the CPI's "rent, fuel and energy" group. These three items are clubbed together and have a weight of 32.2% in the CPI basket. Further, figures showed that rents were slightly up by 0.8% in October over September. (Peninsula Qatar)  Qatar to spend more than $156bn on construction by 2030 – According to a report by EC Harris, Qatar is due to spend $156.8bn on implementing major construction programs by 2030. These construction programs in Qatar – costing $1bn or more – are due to peak in 2016 with $34bn worth of projects due to be delivered. Further, the report showed that some 117 major programs are planned across the Middle East to be completed by 2030, costing more than $1tn. (Gulf-Times.com) Market & Corporate News  VFQS FY2014 guidance in line with model – Slightly lowerthan-expected top-line and higher depreciation charges contributed to marginal September quarter net income miss. Vodafone Qatar (VFQS) reported revenue of QR465mn for 2QFY2014 (+1% QoQ, +35% YoY) only 2% shy of our estimate of QR475mn. Net loss of QR75mn (vs. QR85mn in June 2013 and QR122mn in September 2012) was 5% worse than our estimate of QR71mn with higher-than-expected depreciation charges contributing to the net income divergence. As expected, VFQS management provided FY2014 guidance during the conference call. VFQS expects QR1.90-QR1.95bn in revenue, implying YoY growth in the range of 24%-28%; our modeled estimate was QR1.90bn (BBG mean: QR1.87bn). On the EBITDA front, VFQS expects to post around QR435QR470mn, up by 53%-66% YoY; we had been expecting an EBITDA of QR446mn (BBG consensus: QR442mn). This implies an EBITDA margin within 22.9%-24.1% vs. 18.6% in FY2013. On the capex front, VFQS projects to spend around 18% of revenue vs. 26% in FY2013. Overall FY2014 guidance is in line with our estimates. Finally, we continue to expect VFQS to pay QR0.10 in dividends per share in FY2014. (QNBFS Research, VFQS press release)  Banking sector loans outpace deposits in the month of October 2013 – Deposits increased by 1.5% MoM (+16.6% YTD) while loans grew by 2.7% MoM (+12.0% YTD) in the month of October 2013. Going forward, we expect activity in the banking sector to further pick up in the coming months. Hence, we expect loan growth of ~15% for 2013 vs.12.0% YTD. The banking sector‟s loan-to-deposit ratio (LDR) increased to 107% at the end of October 2013 vs. 106% in September 2013. Going forward, some banks are contemplating issuing Tier I bonds (eg. Doha Bank and the Commercial Bank of Qatar), which should help improve their capital adequacy ratios (CARs) as well as provide additional funds aiding loan book growth. (QNBFS Research, QCB)  Ooredoo gears up for debut sukuk – Ooredoo has hired five banks to arrange the sale of its first dollar-denominated Islamic bond (sukuk) offering. The banks mandated act as joint lead managers and bookrunners for the sukuk issue are DBS Bank, Deutsche Bank, HSBC, QInvest and QNB Capital. Starting from November 22, the Qatari telecom company will embark on roadshows to meet key investors across the Middle East, Asia and Europe. The size and pricing of the offering would be determined later. (Bloomberg)  QDB signs MoU with QNB to boost global presence – The Qatar Development Bank (QDB) has signed a memorandum of understanding (MoU) with QNB to make further inroads into overseas markets. Both the institutions will mutually develop plans to ensure that export-led Qatari companies and foreign importers of Qatari non-oil products receive financial facilities offered by Tasdeer, QDB‟s export arm. Under the new agreement, financial services teams of QNB‟s overseas branches will highlight the financial facilities offered by Tasdeer to foreign importers, while QDB will commit to offering financial services and discounts to foreign importers in partnership with QNB. The two banks will be conducting joint visits to QNB‟s national and international customers to familiarize them with the services. (Gulf-Times.com)  Barwa Bank earns QR442mn net income in 9M2013 – Barwa Bank has earned a net income worth QR442mn for the ninemonth period up to September 2013, rising 60% over QR279mn in 9M2012. Total income increased by 26% to QR1.1bn in the nine months as compared with QR855mn in the same period in 2012. EPS rose to QR1.49 in September 2013 compared with QR0.94 in September 2012. (Gulf-Times.com)  DHBK to raise capital via private placement or bonds; opens office in Sharjah – Doha Bank‟s (DHBK) CEO Raghavan Seetharaman said the bank is planning to raise its capital via private placement or bonds. He added that depending on market conditions, DHBK will either opt for a private placement or bond issuance. He also said that DHBK is planning to expand its capital by QR2bn within this year (deadline is end-1Q2014, EOGM to be held on Nov. 24, 2013) and seeks approval for a $549mn perpetual bond issue. Meanwhile, the bank has opened its first representative office in Sharjah, following regulatory approval from the UAE Central Bank. (Bloomberg, Gulf-Times.com)  GISS updates investors on Al Koot – Gulf International Services Company (GISS) has confirmed that discussions regarding change of ownership of Al Koot (wholly-owned insurance and reinsurance firm) have been put indefinitely on hold. Hence, no major change is expected in the company structure or in its operation. (QE)  Gulf Helicopters orders 15 AW189 helicopters – Gulf Helicopters of Qatar has ordered fifteen AgustaWestland AW189 helicopters. This ordering follows the preliminary sale contract announced in early 2012, confirming the operator's commitment to the new model. The first two aircraft will be delivered to Gulf Helicopters in 2014, with the remainder delivered through 2017. (Bloomberg)  Barwa Real Estate inks MoA with Qatari Diar – Barwa Real Estate has signed a memorandum of agreement (MoA) with its strategic partner, Qatari Diar (45% owner of Barwa). The agreement covers selling assets worth QR20bn that needs to be implemented latest by June 30, 2014. This agreement is a part of Barwa‟s plans to restructure its finances in order to reduce debt, which would reflect positively on its financial statements. (QE) Page 2 of 5
  • 3. Qatar Exchange Top 5 Gainers Top 5 Decliners 0.0% 12.0% 9.5% 9.4% 8.5% 8.0% 8.0% 7.8% -2.0% -1.7% -1.8% -1.9% -2.7% -3.2% 4.0% -4.0% 0.0% Dlala Holding Medicare Group Qatari Investors Group Barwa Real Estate Vodafone Qatar Source: Qatar Exchange (QE) -6.0% Islamic Holding Group Doha Insurance Gulf International Services Widam Food Mannai Corp. Co. Source: Qatar Exchange (QE) Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million) 600.0 18.0 14.4 415.4 377.1 400.0 11.7 12.0 9.7 9.6 6.6 225.1 200.0 173.0 171.8 6.0 0.0 0.0 Barwa Real Estate Qatari Investors Group United Development Masraf Al Rayan Source: Qatar Exchange (QE) 16.45% 60% Vodafone Qatar Non-Qatari 560 777 30.99% 40% 44.19% United Mazaya Qatar Development 218 13.48% 25.88% Qatari Investors Group Net Traded Value by Nationality (QR Million) 8.94% 12.61% 80% Barwa Real Estate Source: Qatar Exchange (QE) Investor Trading Percentage to Total Value Traded 100% Medicare Group 47.47% (218) 20% Qatari 2,037 1,819 0% Buy Sell Qatari Individuals Qatari Institutions Non-Qatari Individuals Non-Qatari Institutions Source: Qatar Exchange (QE) (500) Net Investment 500 1,000 Total Sold 1,500 2,000 2,500 Total Bought Source: Qatar Exchange (QE) Page 3 of 5
  • 4. TECHNICAL ANALYSIS OF THE QE INDEX Source: Bloomberg The QE Index continued its uptrend for the third consecutive week and gained 70.60 points (0.69%) to close at 10,283.0, but the rally lost some steam over the last couple of days. It was a short week for the markets, with only four trading sessions, after trading was cancelled on Tuesday. The index started the week on a strong note, as the gains were supported by good trading volumes. However, traders looked to book profits over the last couple of days, after the sharp run-up in the past three weeks. If the index holds above its support level of 10,220, we believe the uptrend will continue, with the 10,360 level acting as a strong resistance zone. On the other hand, if the index penetrates below this level, it may fall toward its support of 10,150.0-10,100.0, which would be a good level for buyers to step in. Meanwhile, the RSI has begun to trend lower from the overbought zone, indicating that the market may witness some correction over the short-term. DEFINITIONS OF KEY TERMS USED IN TECHNICAL ANALYSIS RSI (Relative Strength Index) indicator – RSI is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between 0 to 100. The index is deemed to be overbought once the RSI approaches the 70 level, indicating that a correction is likely. On the other hand, if the RSI approaches 30, it is an indication that the index may be getting oversold and therefore likely to bounce back. MACD (Moving Average Convergence Divergence) indicator – The indicator consists of the MACD line and a signal line. The divergence or the convergence of the MACD line with the signal line indicates the strength in the momentum during the uptrend or downtrend, as the case may be. When the MACD crosses the signal line from below and trades above it, it gives a positive indication. The reverse is the situation for a bearish trend. Candlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The „body‟ of the chart is portion between the open and close price, while the high and low intraday movements form the „shadow‟. The candlestick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis. Doji candlestick pattern – A Doji candlestick is formed when a security's open and close are practically equal. The pattern indicates indecisiveness, and based on preceding price actions and future confirmation, may indicate a bullish or bearish trend reversal. Shooting Star/Inverted Hammer candlestick patterns – These candlestick patterns have a small real body (open price and close price are near to each other), and a long upper shadow (large intraday movement on the upside). The Shooting Star is a bearish reversal pattern that forms after a rally. The Inverted Hammer looks exactly like a Shooting Star, but forms after a downtrend. Inverted Hammers represent a potential bullish trend reversal. Page 4 of 5
  • 5. Price % Change 5(Nov 21) Day Company Name 173.00 Qatar National Bank % Change Monthly Market Cap. QR Million TTM P/E P/B Div. Yield (0.29) 4.22 121,053 13.1 2.4 3.5 Qatar Islamic Bank 68.50 0.29 1.18 16,186 15.0 1.4 5.5 Commercial Bank of Qatar 69.40 (0.57) 4.68 17,173 9.8 1.2 8.6 Doha Bank 56.80 0.00 3.27 14,676 10.0 1.6 7.3 Al Ahli Bank 55.00 1.85 (0.90) 6,989 13.5 2.0 5.4 Qatar International Islamic Bank 58.40 (0.34) 1.92 8,840 12.3 1.8 6.0 Masraf Al Rayan 32.00 1.11 9.03 24,000 14.4 2.4 3.1 Al Khaliji Bank 19.52 0.67 3.66 7,027 13.2 1.3 5.1 National Leasing 31.00 (0.48) 1.64 1,534 13.1 1.2 6.5 Dlala Holding 22.00 9.51 7.53 488 N/M 2.2 N/A Qatar & Oman Investment 12.68 2.26 2.67 399 26.6 1.2 3.9 Islamic Holding Group 39.95 (3.15) (5.22) 160 21.5 2.8 2.8 218,525 Banking and Financial Services Zad Holding 68.80 1.18 1.03 900 9.1 0.7 5.8 Qatar German Co. for Medical Devices 14.65 (0.20) (2.98) 169 N/M 0.9 N/A Salam International Investment 12.11 0.17 (0.74) 1,384 10.7 0.8 5.8 Medicare Group 53.90 9.44 9.89 1,517 24.7 2.0 3.3 Qatar Cinema & Film Distribution 44.50 3.49 0.68 254 34.0 1.8 4.5 288.50 1.05 1.66 18,743 15.7 3.1 3.5 (1.75) (1.04) 860 14.3 3.5 8.4 0.60 (0.37) 2,700 18.5 2.2 5.9 Qatar Fuel 47.75 Qatar Meat and Livestock 135.00 Al Meera Consumer Goods 26,528 Consumer Goods and Services 50.40 (0.20) 0.20 1,996 9.5 1.5 6.0 Qatar National Cement 103.00 (0.87) 0.68 5,057 11.9 2.0 5.8 Industries Qatar 166.80 (0.36) 4.58 100,914 12.4 3.1 4.6 Qatar Industrial Manufacturing 38.15 Qatar Electricity and Water 8.53 21.11 4,743 20.3 2.3 2.0 168.10 Qatari Investors Group 1.14 5.72 16,810 11.1 3.0 4.3 Mannai Corp. 87.00 (1.69) (2.14) 3,969 8.6 1.7 5.5 Aamal 14.72 1.80 3.30 8,832 14.0 1.3 N/A Gulf International Services 58.10 (1.86) (0.85) 8,638 14.3 3.0 2.6 150,959 Industrials Qatar Insurance 65.40 (0.76) 2.99 8,399 10.3 1.7 3.1 Doha Insurance 25.20 (2.70) 0.80 649 11.5 1.3 3.6 Qatar General Insurance & Reinsurance 50.90 0.39 (6.09) 2,934 3.4 0.9 1.7 Al Khaleej Takaful Insurance 38.35 (0.65) (1.16) 655 13.6 1.1 2.2 Qatar Islamic Insurance 57.10 (1.55) 0.35 857 13.5 3.1 6.1 13,494 Insurance United Development 23.60 0.98 7.27 7,959 9.7 0.7 4.2 Barwa Real Estate 29.60 8.03 10.45 11,518 16.9 0.9 5.1 Ezdan Real Estate 17.64 2.68 3.10 46,790 55.1 1.7 0.7 Mazaya Qatar Real Estate Development 11.60 3.20 1.93 1,160 17.5 1.1 5.2 44,172 16.8 1.8 3.6 8,927 N/M 1.5 N/A 10,032 10.3 0.8 4.3 1,891 19.0 2.4 N/A 11,234 14.7 3.2 5.0 67,427 Real Estate 137.90 Qatar Telecom (0.14) (0.79) 10.56 7.76 15.92 Qatar Navigation (Milaha) 87.60 0.11 1.62 Gulf Warehousing 39.75 (1.24) (1.12) Qatar Gas Transport (Nakilat) Transportation 20.06 2.50 4.75 Vodafone Qatar 53,100 Telecoms 23,157 Qatar Exchange 553,188 Source: Bloomberg Contacts Saugata Sarkar Ahmed M. Shehada Keith Whitney Sahbi Kasraoui Head of Research Head of Trading Head of Sales Manager - HNWI Tel: (+974) 4476 6534 Tel: (+974) 4476 6535 Tel: (+974) 4476 6533 Tel: (+974) 4476 6544 saugata.sarkar@qnbfs.com.qa ahmed.shehada@qnbfs.com.qa keith.whitney@qnbfs.com.qa sahbi.alkasraoui@qnbfs.com.qa QNB Financial Services SPC Contact Center: (+974) 4476 6666 PO Box 24025, Doha, Qatar DISCLAIMER: This publication has been prepared by QNB Financial Services SPC (“QNBFS”) a wholly-owned subsidiary of Qatar National Bank (“QNB”). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange; QNB is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNBFS at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. While this publication has been prepared with the utmost degree of care by our analysts, QNBFS does not make any representations warranties as to the accuracy and completeness of the information it may contain, and declines any liability in that respect. QNBFS reserves the right to amend the views and opinions expressed in this publication at any time. It may also express viewpoints or make investment decisions that differ significantly from, or even contradict, the views and opinions included in this report. COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS. Page 5 of 5