Market Review and Outlook

QE Index and Volume

The Qatar Exchange (QE) Index gained 233.05 points, or 2.14%,
during the t...
News
Economic News
 QNB Group: $30bn Qatar spend, mega GCC region
projects to drive Gulf growth in 2014 – According to a ...
Qatar Exchange
Top 5 Gainers

Top 5 Decliners
0.0%

12.0%
10.6%

10.5%
9.1%

-3.0%

8.0%

-2.9%
-3.6%

5.9%

-3.5%

Doha
I...
TECHNICAL ANALYSIS OF THE QE INDEX

Source: Bloomberg

The QE Index extended its relentless rally last week, tagging a ser...
Price % Change 5(Jan 16)
Day

Company Name

180.00

Qatar National Bank

% Change
YTD

Market Cap.
QR Million

TTM P/E

P/...
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Weekly market report

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  1. 1. Market Review and Outlook QE Index and Volume The Qatar Exchange (QE) Index gained 233.05 points, or 2.14%, during the trading week, to close at 11,106.13 points. Market capitalization increased by 2.09% to reach QR586.3 billion (bn) as compared to QR574.4 at the end of the previous week. Of the 42 listed companies, 28 companies ended the week higher while 13 fell and 1 remained unchanged. Qatar Islamic Insurance Company (QISI) was the best performing stock with a gain of 10.63% on 0.9 million (mn) shares traded. On the other hand, Islamic Holding (IHGS) was the worst performing stock with a decline of 7.84% on 0.4mn shares traded. 11,150 Regional Indices Qatar (QE)* Dubai Abu Dhabi Saudi Arabia Kuwait Oman Bahrain Close 11,106.13 3,609.18 4,521.47 8,761.06 7,665.14 7,140.24 1,268.52 WTD% MTD% YTD% 2.1 3.0 2.3 1.0 (0.0) (0.2) 0.4 7.0 7.1 5.4 2.6 1.5 4.5 1.6 7.0 7.1 5.4 2.6 1.5 4.5 1.6 10,800 0 12-Jan 13-Jan 14-Jan 15-Jan Volume Week ended Jan 16, 2014 3,079.2 586,346.0 574,369.8 61.9 3.5 29,428 31,167 (5.6) 42 42 0.0 28:13 Value Traded (QR mn) Week ended Jan 09, 2014 2,897.0 64.1 Market Indicators 31:9 – Exch. Market Cap. (QR mn) Volume (mn) Number of Transactions Companies Traded Market Breadth Market Indices Close Total Return 15,868.12 All Share Index 2,748.07 Banks/Financial Svcs. 2,627.36 Industrials 3,701.13 Transportation 1,960.67 Real Estate 2,049.15 Insurance 2,490.16 Telecoms 1,528.00 Consumer 6,086.31 Al Rayan Islamic Index 3,226.45 Market Indices Weekly Index Performance 3.5% 16-Jan QE Index 3.0% 2.3% WTD% 2.1 2.2 2.9 2.4 0.5 2.0 2.4 0.5 0.1 1.4 Chg. % 6.3 2.1 MTD% 7.0 6.2 7.5 5.7 5.5 4.9 6.6 5.1 2.3 6.3 YTD% 7.0 6.2 7.5 5.7 5.5 4.9 6.6 5.1 2.3 6.3 2.1% 1.0% 0.4% 0.0% Weekly Exchange Traded Value ($ mn) 1,053.87 2,364.18 1,578.33 8,639.21 475.17 116.31 7.08 Kuwait Bahrain (3.5%) Oman (0.0%) (0.2%) Saudi Arabia Foreign institutions remained bullish for the week with net buying of QR820.3mn (including t-bonds) vs. net buying of QR519.7mn (including t-bills) in the prior week. Qatari institutions remained bearish with net selling of QR83.4mn vs. net selling of QR346.5mn the week before. Foreign retail investors remained bearish for the week with net selling of QR108.7mn vs. net selling of QR28.7mn in the prior week. Qatari retailer investors remained bearish with net selling of QR628.2mn vs. QR144.6mn the week before. So far in 2014, the Qatar exchange has witnessed net foreign portfolio investment inflow of ~$380mn vs. ~$1,057mn for full year 2013. 10,000,000 10,922.36 Qatar Trading value during the week increased by 6.29% to reach QR3.1bn vs. QR2.9bn in the prior week. The Banks & Financial Services sector led the trading value during the week, accounting for 47.1% of the total equity trading value. Trading volume increased by 3.5% to reach 64.1mn shares vs. 61.9mn shares in the prior week. The number of transaction fell by 5.58% to reach 29,428 transactions versus 31,167 transactions in the prior week. The Banks & Financial Services sector also led the trading volume, accounting for 33.2% of the total. 10,975 Abu Dhabi QNB Group kick started the earning season and posted a net profit of QR9.5bn in 2013, reflecting an increase of 13.7% YoY. EPS stood at QR13.5 in 2013 as compared to QR11.9 in 2012. QNBK also announced distribution of a cash dividend of 70% of the nominal share value (QR7.0 per share) to its shareholders 11,051.48 11,019.86 Dubai Industries Qatar (IQCD) was the biggest contributor to the QE Index. The stock contributed 56.73 points to the index‟s weekly gain. IQCD is up 6.45% year-to-date (YTD). Masraf Al Rayan (MARK) was the second biggest contributor adding 55.09 points to the index. QNB Group (QNBK), which posted solid 2013 results, rounded the top three contributor list adding 47.52 points; the stock hit a high of QR181.70 during the week. On the other hand, Qatari Investors Group (QIGD) shaved 14.81 points off the index during the week. The stock has had a decent run in 2013 posting a total return of 44.8% and the stock is still up 9.04% YTD (2014). 20,000,000 11,106.13 11,075.98 Exchange Mkt. Cap. ($ mn) TTM P/E** P/B** Dividend Yield 161,069.2 73,859.41 128,151.9 480,888.3# 110,000.2 25,445.8 50,654.8 14.1 21.3 12.6 17.8 17.0 11.2 8.3 1.9 1.4 1.6 2.2 1.2 1.7 0.9 4.1 2.5 4.0 3.4 3.7 3.6 3.8 # Source: Bloomberg, country exchanges and Zawya (** Trailing Twelve Months; * Value traded ($ mn) do not include special trades, if any) ( Data as of Jan. 15, 2014) Page 1 of 5
  2. 2. News Economic News  QNB Group: $30bn Qatar spend, mega GCC region projects to drive Gulf growth in 2014 – According to a report by QNB Group, Qatar‟s project spending estimated at $30bn this year and large-scale projects across the GCC will drive the region‟s growth in 2014. In the short term, the GCC region will drive the MENA region‟s growth, mainly through heavy spending on infrastructure. In the GCC region, many countries including Saudi Arabia and Kuwait have huge project spending outlay this year. Dubai‟s successful bid for the World Expo 2020 and a number of new real estate developments will boost project spending in the UAE. The Saudi government alone is spending in excess of $50bn on infrastructure projects through its budget, which excludes significant project spending by the private sector and state-owned companies. The report also said greater integration into the global economy of the MENA region (ex-GCC region) through increased trade openness and enhanced competitiveness could raise long-term growth prospects. QNB Group estimates that real GDP growth in the GCC region stood at 3.7% in 2013, compared with 1.2% in the rest of MENA. This is relatively sluggish compared with the historical average MENA growth of around 5% or higher. (GulfTimes.com)  Qatar CPI inflation fell to 2.7% YoY in December (rental inflation at lowest level since February 2013) – Qatar‟s cost of living, based on consumer price index (CPI), fell to 2.7% YoY in December from 2.8% YoY in November, according to the Ministry of Development Planning & Statistics. On a monthly basis, inflation was unchanged for the second consecutive month in December. The housing and rent component (32.3% of the overall CPI weight) slowed to 4.8% YoY (up 0.2% MoM) which is the slowest pace of increase since February 2013. Food, beverages & tobacco saw a 3.1% acceleration YoY in December 2013 (up 0.2% MoM). However, the entertainment, recreation & culture group rose to 5.2% YoY (0.1% MoM). Furniture, textiles & home appliances surged 4% YoY in December 2013, while it was down 0.1% MoM. The garments and footwear group saw its price rise 0.9% YoY (0.2% MoM). The medical care and medical services group reported a 2.1% increase YoY, but the group remained unchanged MoM. However, miscellaneous goods & services became cheaper by 5.4% YoY in December 2013 (0.8% MoM). (Gulf-Times.com) Market & Corporate News  QE best performer among Arab stock markets since 2009 – The Qatar Exchange (QE) has posted the strongest recovery among all the Arab stock markets since March 2009, recording a surge of 139.39% in its index during 2009-2013. QE is followed by the Dubai Financial Market with an increase of 117.59%, the Saudi stock exchange (93.35%), the Egyptian Exchange (85.96%), the Abu Dhabi Securities Market (75.25%), and the Kuwait Stock Exchange (18.12%). During the 2009-2013 period, the QE Total Return index increased by 206.94% and QE Al Rayyan Islamic Index rose by 267.97% (both including dividends). Furthermore, QE‟s main benchmark QE Index rose by 24.17% in 2013, while the QE Al Rayyan Islamic Index rose by 22%. The market capitalization of all shares traded in QE reached QR555.6bn at the end of 2013 as against QR459.9bn at the end of 2012, while the total value of shares traded during 2013 rose 6% to reach QR74.9bn versus QR70.7bn during 2012. (QE)  QNB Group’s net profit rises 13.7% YoY in 2013 – QNB Group has reported a net profit of QR9.5bn in 2013, reflecting an increase of 13.7% YoY. EPS was QR13.5 in 2013 as compared to QR11.9 in 2012.Net interest income increased by 26.3% YoY to reach QR11.6bn. Total assets stood at QR443bn at the end of December 2013, up by 20.9% from December 2012. Net loans & advances rose by 24.3% from 2012 to reach QR311bn, while total customer deposits were up by 24.3% from 2012 to reach QR336bn. QNB Group has been able to maintain the ratio of non-performing loans to gross loans at 1.6%, a level considered one of the lowest among banks in the Middle East and Africa. Meanwhile, the group‟s board has recommended the distribution of a cash dividend of 70% of the nominal share value (QR7.0 per share) to its shareholders. (QE, QNB Group press release)  ABQK posted a net profit of QR112.1mn in 4Q2013 – Al Ahli Bank (ABQK) reported a decline of 21.5% QoQ to QR112.1mn in its net profit in 4Q2013. Net profit for 2013 rose by 13% YoY to QR525.7mn. Net interest income was up by 2.6% QoQ to QR183.7mn in 4Q2013, while it increased by 27.8% YoY to QR685.4mn in 2013. EPS amounted to QR4.14 in 2013 as compared to QR3.88 in 2012. Total assets stood at QR26.2bn as at December 31, 2013, reflecting an increase of 27.0% YoY. Loans & advances rose by 23.5% YoY to QR17.3bn, while customer deposits were up by 35.4% YoY to QR18.9bn. Meanwhile, the bank‟s board of directors has approved the budget and recommended the distribution of bonus shares 30% from its capital shares on December 31, 2013 subject to the approval of QCB and the general assembly meeting. Furthermore, the board has decided to open a nomination to the Qatari Shareholders to elect six members to the board of directors for a period of three years (2014-2016). The AGM of Ahlibank is determined on February 25, 2014. In case no quorum, the second meeting will be on March 4, 2014. (QE)  IHGS’ net profit declines 22.6% QoQ – The Islamic Holding Group (IHGS) has reported a net profit of QR2.0mn in 4Q2013, reflecting a fall of 22.6% QoQ. However, net profit for the entire 2013 amounted to QR9.0mn, rising 49.4% YoY. Net brokerage & commission income rose by 30.5% QoQ to reach QR4.5mn in 4Q2013, while it was up by 6% YoY to QR13.6mn in 2013. EPS amounted to QR2.26 in 2013 as compared to QR1.51 in 2012. Meanwhile, IHGS‟ board has recommended distributing cash dividends of 17% of the paid-up capital of shares (by QR1.7 per share) to its shareholders. (QE)  CBQK raises QR2bn in Tier 1 perpetual capital notes – The Commercial Bank of Qatar (CBQK) has raised QR2bn in additional Tier 1 perpetual capital notes to enhance its capital adequacy ratios and to support future growth across the group. The transaction was completed on December 31, 2013. (QE)  MERS signs deal with Shannon Engineering to build 2 stores – Al Meera Consumer Goods Company (MERS) has signed an agreement with Shannon Engineering for the construction of two new stores in Al Muraikh and Jeryan Nejaima areas. Shannon Engineering will build the two stores – at Al Muraikh on an area of 5,526 square meters and at Jeryan Nejaima on 5,526 square meters. They are expected to be completed in nine months. MERS is planning to open about 10 new branches by the end of 2014. (Gulf-Times.com)  Nakilat, Qatargas and RasGas opt for cleaner marine fuel – Qatari shipping company and LNG producers have announced that they would choose to use cleaner marine fuel and reduce emissions of their ships. Qatari shipping company Nakilat and LNG producers Qatargas and RasGas Company have agreed with the engine manufacturer MAN Diesel & Turbo to convert a Q-Max vessel to use LNG as an alternative to heavy fuel oil in the main engines. (Peninsula Qatar) Page 2 of 5
  3. 3. Qatar Exchange Top 5 Gainers Top 5 Decliners 0.0% 12.0% 10.6% 10.5% 9.1% -3.0% 8.0% -2.9% -3.6% 5.9% -3.5% Doha Insurance Dlala Holding 5.5% 4.0% -6.0% -5.6% -7.8% 0.0% Qatar Islamic Insurance Al Ahli Bank Mazaya Qatar Qatar German Gulf Co. for Medical International Devices Services Source: Qatar Exchange (QE) -9.0% Islamic Holding Group Qatari Investors Group Medicare Group Source: Qatar Exchange (QE) Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million) 750.0 15.0 581.9 10.5 500.0 10.0 7.0 272.1 250.0 241.7 5.1 5.0 229.4 4.5 4.3 Qatari Investors Group Barwa Real Estate 178.0 0.0 0.0 Mazaya Qatar QNB Group Industries Qatar Masraf Al Rayan Qatari Investors Group Commercial Bank of Qatar Source: Qatar Exchange (QE) Masraf Al Rayan Vodafone Qatar Source: Qatar Exchange (QE) Investor Trading Percentage to Total Value Traded Net Traded Value by Nationality (QR Million) 712 10.27% 100% 36.91% Non-Qatari 14.03% 748 80% 60% 10.50% 1,460 27.36% 24.65% 40% 48.34% 20% (712) 27.94% Qatari 2,331 1,619 0% Buy Sell Qatari Individuals Qatari Institutions Non-Qatari Individuals Non-Qatari Institutions Source: Qatar Exchange (QE) (1,000) (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. 4. TECHNICAL ANALYSIS OF THE QE INDEX Source: Bloomberg The QE Index extended its relentless rally last week, tagging a series of new 52-week highs and registered gains on every single day for the second consecutive week. Moreover the index moved above the 11,000.0 and 11,100.0 psychological levels for the first time since 2008, as high demand pushed prices higher. The index is now witnessing a firm bull grip and may continue to scale higher, targeting the 11,200.0 and 11,300.0 psychological levels. If the demand persists above these levels the bulls may continue their domination over the bears and push the index higher. We believe the uptrend in the index may remain intact and may continue to advance until it trades above the support of the ascending trendline. Meanwhile, both momentum indicators are in uptrend mode and are showing no immediate trend reversal signs indicating that this rally has enough steam to accelerate further. On the flip side, traders may need to keep a close eye on the support of the ascending trendline near 11,000.0 for any reversal signs. Thus, traders may adopt a bullish approach, but are advised to exercise cautious if the index dips below the support of the ascending trendline. 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. 5. Price % Change 5(Jan 16) Day Company Name 180.00 Qatar National Bank % Change YTD Market Cap. QR Million TTM P/E P/B Div. Yield 3.15 4.65 125,951 13.3 2.4 3.3 Qatar Islamic Bank 73.80 (1.47) 6.96 17,438 16.1 1.5 5.1 Commercial Bank of Qatar 75.00 1.76 5.93 18,558 10.6 1.3 8.0 Doha Bank 64.10 1.75 10.14 16,562 11.2 1.8 6.5 Al Ahli Bank 63.40 10.45 15.27 8,057 15.3 2.3 4.7 Qatar International Islamic Bank 70.80 4.12 14.75 10,717 15.0 2.1 4.9 Masraf Al Rayan 35.15 5.24 12.30 26,363 15.8 2.6 2.8 Al Khaliji Bank 21.00 0.96 5.05 7,560 14.2 1.4 4.8 National Leasing 30.50 (1.29) 1.16 1,509 12.9 1.2 6.6 Dlala Holding 22.87 (3.50) 3.48 508 N/M 2.3 N/A Qatar & Oman Investment 12.87 (1.08) 2.80 405 27.0 1.2 3.9 Islamic Holding Group 47.00 (7.84) 2.17 188 20.8 3.2 2.4 233,816 Banking and Financial Services Zad Holding 69.70 0.58 0.29 912 9.2 0.7 5.7 Qatar German Co. for Medical Devices 14.51 5.91 4.77 168 N/M 0.9 N/A Salam International Investment 13.25 1.69 1.84 1,515 11.7 0.9 5.3 Medicare Group 53.10 (2.93) 1.14 1,494 24.3 1.9 3.4 Qatar Cinema & Film Distribution 42.70 4.15 6.48 244 32.6 1.8 4.7 289.90 0.31 2.04 18,834 15.7 3.1 3.4 52.10 (2.07) 0.77 938 15.6 3.9 7.7 142.00 (0.14) 6.53 2,840 19.5 2.3 5.6 Qatar Fuel Qatar Meat and Livestock Al Meera Consumer Goods 26,945 Consumer Goods and Services 52.80 1.93 4.35 2,091 9.9 1.5 5.7 Qatar National Cement 119.40 0.34 0.34 5,863 13.8 2.4 5.0 Industries Qatar 179.80 3.39 6.45 108,779 13.4 3.4 4.3 (5.64) 9.04 5,924 25.4 2.8 1.6 183.00 2.92 0.60 18,300 12.1 3.2 4.0 Mannai Corp. 91.00 2.25 1.22 4,151 9.0 1.8 5.2 Aamal 14.98 (0.13) (0.13) 8,988 14.3 1.4 N/A Gulf International Services 71.40 5.47 10,615 17.5 3.7 2.1 Qatar Industrial Manufacturing 47.65 Qatari Investors Group Qatar Electricity and Water 17.05 164,711 Industrials Qatar Insurance 72.80 1.96 9.47 9,350 11.5 1.9 2.8 Doha Insurance 26.95 (3.58) 7.80 694 12.3 1.4 3.4 Qatar General Insurance & Reinsurance 45.45 2.13 (5.11) 2,620 3.0 0.8 1.9 Al Khaleej Takaful Insurance 39.30 5.08 7.67 671 14.0 1.1 2.1 Qatar Islamic Insurance 64.50 10.63 11.40 968 15.2 3.5 5.4 14,302 Insurance United Development 23.23 1.22 2.74 7,834 9.6 0.7 4.3 Barwa Real Estate 31.50 1.78 5.70 12,257 18.0 0.9 4.8 Ezdan Real Estate 17.12 (0.75) 0.71 45,411 53.5 1.6 0.8 Mazaya Qatar Real Estate Development 12.48 9.09 11.63 1,248 18.9 1.1 4.8 66,750 Real Estate 144.00 0.00 4.96 46,126 17.5 1.9 3.5 11.35 3.18 5.98 9,595 N/M 1.6 N/A Qatar Navigation (Milaha) 90.50 (0.55) 9.04 10,365 10.6 0.9 4.1 Gulf Warehousing 41.55 1.34 0.12 1,976 19.8 2.5 N/A Qatar Gas Transport (Nakilat) Transportation 21.00 1.20 3.70 11,760 15.4 3.3 4.8 Qatar Telecom Vodafone Qatar 55,721 Telecoms 24,101 Qatar Exchange 586,346 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

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