Weekly Market Report

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Weekly Market Report

  1. 1. Page 1 of 5Market Review and Outlook QE Index and VolumeThe Qatar Exchange (QE) Index lost 233.61 points, or 2.46%, duringthe week, to close at 9,246.19 points. Market capitalization fell by 2.09%to reach QR509.1 billion (bn) as compared to QR520.0bn at the end of theprevious week. Of the 42 listed companies, 4 companies ended the weekhigher, 35 fell and 3 remained unchanged. Qatar Electricity & WaterCompany (QEWS) was the best performing stock with a gain of 1.76%; thestock is up 17.82% year-to-date (YTD). Gulf International Services (GISS)was the top decliner, down 8.80%; the stock is still up 41.67% YTD.The big news during the week was the US Federal Reserve ChairmanBen Bernanke’s comments about the US Economy. According to Mr.Bernanke, the US economy is expanding strongly enough for the centralbank to begin slowing down the pace of its bond-buying stimulus later thisyear. The steady moderate growth should lead to a further healing in theUS job market as headwinds facing the US economy ease. He also saidpolicymakers expect inflation to move back up toward their long-term 2%goal. He added that the jobless rate should have declined to near 7%from its current rate of 7.6% by the time Fed‟s bond purchases are halted.The news dampened investor sentiment and global equity markets werein negative territory after the US Fed meeting. On the other hand, newsfrom the second largest global economy, China, is also hurting investoroutlook about emerging markets. Chinas factory activity weakened to anine-month low in June as demand faltered, heightening risks that asecond quarter slowdown could be sharper than expected and raising theheat on the central bank to loosen its monetary policy. Chinas flashHSBC Purchasing Managers Index fell to 48.3 in June from Mays finalreading of 49.2. Regional markets are not immune from the globaltrends and have been in a correction mode. In Qatar so far (YTD 2013)foreign institutions have been the biggest buyers of equities (~QR2.3bnYTD 2013 vs. net selling of QR2.5bn in 2012). However, we believe anyselling from the foreign institutional front can open up attractiveopportunities to accumulate stocks on dips.Equity trading value during the week decreased by 47.03% to reachQR1,823.5 million (mn), as compared to QR3,442.4mn in the priorweek. The Banks & Financial Services sector led the trading value duringthe week, accounting for 33.53% of the total equity trading value.Equity trading volume decreased by 45.35% to reach 48.7mn shares,as against 89.0mn shares in the prior week. The number oftransactions fell by 30.27% to reach 21,802 transactions versus 31,267transactions in the prior week. The Real Estate sector led the tradingvolume, accounting for 41.60% of the total volume.Foreign institutions turned bearish for the week with overall net sellingof QR46.0mn vs. net buying of QR265.8mn in the prior week. Foreignindividuals sold QR27.7mn (net) versus net selling of QR47.5mn in the priorweek. Qatari institutions turned bullish with net buying of QR117.3mn versusnet selling of QR46.5mn in the prior week. Qatari individuals remainedsellers with net selling of QR43.4mn as compared to QR171.8mn in theprior week.Market IndicatorsWeek endedJune 20, 2013Week endedJune 13, 2013Chg. %Value Traded (QR mn) 1,823.5 3,442.4 (47.0)Exch. Market Cap. (QR mn) 509,085.3 519,959.2 (2.1)Volume (mn) 48.7 89.0 (45.3)Number of Transactions 21,802 31,267 (30.3)Companies Traded 41 41 0.0Market Breadth 4:35 28:10 –Market Indices Close WTD% MTD% YTD%Total Return 13,210.68 (2.5) 0.1 16.8All Share Index 2,342.04 (2.3) (0.1) 16.3Banks/Financial Svcs. 2,196.05 (2.0) 0.4 12.7Industrials 3,148.96 (1.9) (0.8) 19.9Transportation 1,644.05 (4.1) (1.1) 22.7Real Estate 1,853.88 (3.9) 3.4 15.0Insurance 2,270.27 (2.6) (1.0) 15.6Telecoms 1,278.97 (2.8) (0.6) 20.1Consumer 5,480.57 (1.8) (1.4) 17.3Al Rayan Islamic Index 2,811.07 (2.6) 0.8 13.0Market IndicesWeekly Index PerformanceRegional Indices Close WTD% MTD% YTD%Weekly ExchangeTraded Value ($ mn)Exchange Mkt.Cap. ($ mn)TTM P/E** P/B** Dividend YieldQatar (QE)* 9,246.19 (2.5) 0.1 10.6 500.76 139,794.8 11.7 1.7 5.0Dubai 2,360.59 (1.6) (0.3) 45.5 668.31 60,635.5 15.2 1.0 3.6Abu Dhabi 3,632.36 (0.8) 2.0 38.1 529.25 105,234.9 11.1 1.3 4.8Saudi Arabia#7,526.26 (1.3) 1.6 10.7 9,300.66 401,802.0 16.0 2.0 3.7Kuwait 8,059.86 1.6 (2.9) 35.8 1,059.13 108,517.3 25.3 1.4 3.3Oman 6,390.25 (2.6) (0.4) 10.9 90.80 22,368.7 10.9 1.7 4.4Bahrain 1,201.69 0.3 0.4 12.8 21.03 21,341.9 8.8 0.8 4.1Source: Bloomberg, country exchanges and Zawya (** Trailing Twelve Months; * Value traded ($ mn) do not include special trades, if any) (#Saudi Arabias work week is from Saturday to Wednesday)9,424.419,429.709,361.05 9,340.019,246.1907,000,00014,000,0009,1509,3009,45016-Jun 17-Jun 18-Jun 19-Jun 20-JunVolume QE Index1.6%0.3%(0.8%)(1.3%) (1.6%)(2.5%) (2.6%)(4.0%)(2.0%)0.0%2.0%KuwaitBahrainAbuDhabiSaudiArabiaDubaiQatarOman
  2. 2. Page 2 of 5NewsEconomic News Qatar monthly banking update – Deposits declined by 2.4%MoM (+11.5% YTD) due to a 7.4% MoM drop in public sectordeposits, while loans increased by 1.2% MoM (+5.5% YTD) inMay 2013. Hence, the sector loan-to-deposit ratio (LDR) rose to105% in May 2013 versus 102% at the end of April 2013.(QCB) QCB sets cap for bank investments in securities – QatarCentral Bank (QCB) has set the cap for bank investments inequity and debt securities at 25% of lenders‟ capital andreserves. Further, the QCB has set a limit for investing inindividual companies at 5% of lenders‟ capital and reserves,whereas, the limit of total securities investment outside Qatar isset at 15%. The QCB has set the limit of total unlisted securitiesat 10% inside Qatar and 5% abroad. Meanwhile, QCB hasexempted debt instruments issued by the Qatari government,central bank, licensed national banks from these limits.Moreover, QCB has set limit on property investment for Islamicbanks at 10% of capital, reserves, and limits on investments inassociates is set at 35%, including investments, financing, allrisk exposure and limit on investment in single associatecompany at 25%. (Bloomberg) QE introduces QCB bonds for trading – The Qatar Exchange(QE) has introduced government bonds issued by the QatarCentral Bank (QCB) for trading on the exchange commencingon June 20, 2013. Bond trading has been initiated to supportthe development of the financial market in Qatar on the onehand, and diversification of investment tools available forinstitutions and investors on the other. The trading ofgovernment bonds follows the trading of treasury-bills, whichwas launched in December 2011. At the launch of thegovernment bond market, four bonds will be available fortrading and it is expected that future quarterly issues will alsobe listed on the market. (QE) QCB elects board of directors – Qatar‟s Emir HH SheikhHamad bin Khalifa al Thani has issued an Emiri decision toform the board of directors for the Qatar Central Bank (QCB).The QCB Governor Sheikh Abdullah bin Saud bin Abdulaziz alThani has been appointed as the Chairman and DeputyGovernor Sheikh Fahd bin Faisal bin Thani al Thani as theDeputy Chairman. Other board members appointed are: KhalafAhmed al Mannai, the representative of the Ministry ofEconomy & Finance, Sultan Rashid al Khater, therepresentative of the Ministry of Business & Trade, Dr IbrahimIbrahim, Dr Saleh Mohammed al Nabit, and Nasser Ahmed alShaibi. (Qatar Tribune)Market & Corporate News GISS releases 5-year business plan; 2013 net incomeguidance below expectations, however – Gulf InternationalServices (GISS) said it will continue to focus on organicopportunities, principally around increasing medical insurancemarket share & acquiring additional helicopters, rigs and otherrelated drilling services under its five year plan for 2013-17. Thecompany expects its revenue and net profit to increasesignificantly over the planning period. Strong performance isexpected due to new assets deployment, new operations andmarket development. Growth is expected across all segmentsof the company. In 2013, GISS expects its revenue to reachQR1,950.3mn, up roughly 25% YoY. Net income is howeverexpected to decline ~2% YoY to QR455.6mn (23.4% NM) vs.QR464.3mn in 2012. This is lower than the consensus forecast(caveat: one estimate) of QR534mn and also below itsannualized 1Q2013 net income of QR543mn. The companyexpects a 2013 EBITDA of QR556.9mn (28.6% EBITDAmargin). GISS stated that its insurance & reinsurance sectorrevenue is expected to touch QR0.7bn in 2013 and growmoderately thereafter driven by a strong performance of themedical line. The aviation services sector is expected to reportQR537mn revenue in 2013; it is expected to grow at a steadypace thereafter. However, salaries and wage inflation of~QR50m in 2013 will crimp profitability this year. Longer-term,this segment will benefit from the new higher rate aircraft withnet fleet to grow to 51 (2017) vs. 41 (2012). Meanwhile, thedrilling services segment is expected to reach QR821.1mn in2013, with long-term growth mainly on the back of new offshorerigs and jack-up barge. This segment‟s net profit for 2013 willrise sharply vs. 2012, and increase steadily thereafter. GISSsaid its catering services segment‟s revenue will grow toQR750mn in 2013 and subsequently grow moderatelythereafter. The growth in this segment will be driven by QatarPetroleum‟s new investment program. (GISS Press Release,QNBFS) QNB Group named Best Bank in Qatar and Middle East –QNB Group has been awarded the “Best Bank in Qatar” title bythe Banker Middle East for the third consecutive year.Additionally, the group has been recognized on the regionallevel with the “Best Bank in the Middle East” award.(GulfBase.com) Ooredoo withdraws bid for Vivendi stake in Maroc Telecom– Ooredoo (formerly QTEL) has withdrawn its bid for Vivendi‟s53% stake in Moroccan telecom operator, Maroc Telecom,leaving Emirates Telecommunications Corporation as the onlyremaining bidder. Meanwhile, Vivendi is reportedly in talks tosell its stake in Maroc Telecom to EmiratesTelecommunications Corp (Etisalat) after Ooredoo withdrew itsoffer. (Bloomberg, GulfBase.com) S&P affirms Ooredoo’s ratings with Negative outlook –Standard & Poors has affirmed Ooredoo‟s (formerly QTEL)long and short-term corporate credit ratings at A/A-1 and QTELInternational Finance‟s senior unsecure debt at A, with aNegative outlook. At the same time, S&P said these ratingswere removed from CreditWatch, where they had been placedwith negative implications. (Bloomberg) Ooredoo to spend QR1bn on nationwide fiber connectionby 2014 – Ooredoo‟s (formerly QTEL) COO Waleed al Sayedsaid the company is planning to spend QR1bn to ensure that allhouseholds in Qatar are connected to a nationwide fiber opticnetwork by the end of 2014. He also said that Ooredoo is set tolaunch its “Business Fibre” by 3Q2013, which is an ultra-fastfiber optic network targeting businesses in Qatar and SMEs inparticular. (Qatar Tribune, Gulf-Times.com) CBQK to dissolve Gekko – The Board of Directors of TheCommercial Bank of Qatar has reviewed the operatingperformance of and future potential for, Gekko LLC (“theCompany”) and has approved the dissolution of the Company.The Company was formed as a joint venture in whichCommercial. Bank owns 50% of the shares to marketcontactless payment cards. The impact on the financialperformance of Commercial Bank will be minimal. (Bloomberg)
  3. 3. Page 3 of 5Qatar ExchangeTop 5 Gainers Top 5 DeclinersSource: Qatar Exchange (QE) Source: Qatar Exchange (QE)Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million)Source: Qatar Exchange (QE) Source: Qatar Exchange (QE)Investor Trading Percentage to Total Value Traded Net Traded Value by Nationality (QR Million)Source: Qatar Exchange (QE) Source: Qatar Exchange (QE)1.8%1.3%1.2% 1.1%0.0%1.0%2.0%3.0%Qatar Electricityand WaterQatar German Co.for MedicalDevicesQatar IndustrialManufacturingQatar NationalCement-8.8%-4.8% -4.7% -4.7% -4.6%-9.0%-6.0%-3.0%0.0%GulfInternationalServicesGulfWarehousingDohaInsuranceBarwa RealEstateMazaya QatarReal EstateDevelopment329.1259.1135.3 121.9 121.80.0200.0400.0600.0UnitedDevelopmentIndustriesQatarCommercialBank of QatarBarwa RealEstateMasraf AlRayan13.74.5 4.53.81.90.06.012.018.0UnitedDevelopmentBarwa RealEstateMasraf AlRayanQatar GasTransport(Nakilat)Mazaya QatarReal EstateDevelopment0%20%40%60%80%100%Buy Sell37.69% 40.07%28.54% 22.11%11.65% 13.17%22.12% 24.64%Qatari Individuals Qatari InstitutionsNon-Qatari Individuals Non-Qatari Institutions1,2086161,13468974(74)(200) - 200 400 600 800 1,000 1,200 1,400QatariNon-QatariNet Investment Total Sold Total Bought
  4. 4. Page 4 of 5TECHNICAL ANALYSIS OF THE QE INDEXSource: BloombergThe QE Index finished lower at the end of the week, losing about 234 points (-2.46%) breaking its eight-week long continuous uptrend. This week‟s rallywas short-lived, with the buying coming to a standstill since June 16. This week‟s heavy selling has threatened to completely erase all the gainsaccumulated during the earlier weeks. The QE Index witnessed sustained selling pressure for most of the week and showed no signs of recovery. The indexended the week below both its support levels of 9,310.54 and the 21-day moving average (currently at 9,284.12), which signals further downwardmovement. The immediate support is seen near the psychological level of 9,200.0. However, any sustained weakness below the 9,200.0 level would lead toa breakdown and will likely result in testing the 9,100.0 and 9,050.0 levels, as there is little support until then. On the flip side, if the index can manage tohold above the 9,200 level and witness a bounce back, short-term gains may continue toward 9,400.0. Meanwhile, both the momentum indicators haveshown a bearish divergence, indicating that underlying selling pressure is mounting and is likely to sustain. Traders are advised to watch out for the supportlevels, for any signs of further declines.DEFINITIONS OF KEY TERMS USED IN TECHNICAL ANALYSISRSI (Relative Strength Index) indicator – RSI is a momentum oscillator that measures the speed and change of price movements. The RSI oscillatesbetween 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, ifthe 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 theconvergence 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 theMACD 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 betweenthe 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-daycandlestick chart (every candlestick represents one trading day) in our analysis.Doji candlestick pattern – A Doji candlestick is formed when a securitys open and close are practically equal. The pattern indicates indecisiveness, andbased 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 eachother), and a long upper shadow (large intraday movement on the upside). The Shooting Star is a bearish reversal pattern that forms after a rally. TheInverted Hammer looks exactly like a Shooting Star, but forms after a downtrend. Inverted Hammers represent a potential bullish trend reversal.
  5. 5. ContactsAhmed M. Shehada Keith Whitney Saugata Sarkar Sahbi KasraouiHead of Trading Head of Sales Head of Research Manager - HNWITel: (+974) 4476 6535 Tel: (+974) 4476 6533 Tel: (+974) 4476 6534 Tel: (+974) 4476 6544ahmed.shehada@qnbfs.com.qa keith.whitney@qnbfs.com.qa saugata.sarkar@qnbfs.com.qa sahbi.alkasraoui@qnbfs.com.qaQNB Financial Services SPCContact Center: (+974) 4476 6666PO Box 24025, Doha, QatarDISCLAIMER: 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 QatarFinancial 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 anoffer, 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 potentialinvestors 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 bereliable, 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 rightto 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 viewsand opinions included in this report.COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS.Page 5 of 5Source: BloombergCompany NamePrice(June 20)% Change 5-Day% ChangeMonthlyMarket Cap.QR Million TTM P/E P/B Div. YieldQatar National Bank 151.00 (1.69) 1.07 105,659 12.5 2.3 4.0Qatar Islamic Bank 69.30 (2.26) 0.58 16,375 14.4 1.5 5.4Commercial Bank of Qatar 69.60 (3.33) (0.43) 17,222 8.4 1.2 8.6Doha Bank 46.95 (2.19) (1.16) 12,131 8.0 1.1 8.8Al Ahli Bank 56.00 (1.41) 0.18 7,116 13.7 2.2 5.4Qatar International Islamic Bank 53.60 (1.29) (0.37) 8,113 11.8 1.7 6.5Masraf Al Rayan 27.30 (1.97) 0.18 20,475 13.2 2.2 3.7Al Khaliji Bank 16.75 (0.95) (1.47) 6,030 11.6 1.1 6.0National Leasing 37.45 (3.23) 2.60 1,853 9.0 1.5 5.3Dlala Holding 27.80 (3.14) 4.51 617 24.0 2.6 N/AQatar & Oman Investment 13.40 (2.33) 4.69 422 21.5 1.4 3.7Islamic Holding Group 38.20 (1.80) (6.83) 153 24.6 3.7 2.7Banking and Financial Services 196,167Zad Holding 60.10 (0.33) 0.84 786 7.4 0.6 6.7Qatar German Co. for Medical Devices 15.80 1.28 7.48 182 N/M 1.0 N/ASalam International Investment 13.00 0.00 0.00 1,486 21.8 0.9 5.4Medicare Group 41.50 (2.12) 1.10 1,168 25.3 1.5 4.3Qatar Cinema & Film Distribution 57.00 0.00 (2.56) 325 28.5 2.5 3.5Qatar Fuel 252.40 (2.21) (1.79) 16,398 14.2 3.1 4.0Qatar Meat and Livestock 62.90 (1.26) (0.47) 1,132 15.0 3.9 6.4Al Meera Consumer Goods 136.40 (1.16) (2.57) 2,728 17.7 2.3 5.9Consumer Goods and Services 24,207Qatar Industrial Manufacturing 52.80 1.15 2.92 2,091 10.6 1.7 5.7Qatar National Cement 101.00 1.10 0.00 4,959 11.6 2.2 5.9Industries Qatar 162.90 (2.16) (2.28) 98,555 10.9 3.5 4.7Qatari Investors Group 26.60 (1.66) 5.98 3,307 19.3 1.7 2.8Qatar Electricity and Water 156.00 1.76 7.59 15,600 11.6 3.2 4.7Mannai Corp. 88.00 0.00 3.53 4,014 8.5 1.9 5.4Aamal 14.31 (2.52) (1.31) 8,586 14.0 1.3 N/AGulf International Services 42.50 (8.80) (9.57) 6,319 12.4 2.5 3.5Industrials 143,431Qatar Insurance 62.10 (2.97) (2.97) 7,976 9.1 1.2 3.2Doha Insurance 26.20 (4.73) 2.54 674 11.2 1.4 3.5Qatar General Insurance & Reinsurance 48.25 (0.52) 0.52 2,781 15.3 1.1 1.8Al Khaleej Takaful Insurance 43.20 (4.21) 6.67 738 9.9 1.3 1.9Qatar Islamic Insurance 60.90 (2.40) 5.00 914 15.5 3.8 5.7Insurance 13,083United Development 23.35 (2.83) 8.60 7,874 9.8 0.8 4.3Barwa Real Estate 26.50 (4.68) 0.00 10,312 12.6 0.8 5.7Ezdan Real Estate 17.40 (1.14) 0.23 46,153 N/M 1.7 0.7Mazaya Qatar Real Estate Development 11.21 (4.60) 1.36 1,121 20.5 1.0 5.4Real Estate 65,460Qatar Telecom 121.60 (2.72) (0.08) 38,951 12.3 1.6 4.1Vodafone Qatar 9.01 (3.43) (3.84) 7,617 N/M 1.2 N/ATelecoms 46,568Qatar Navigation (Milaha) 71.80 (4.27) (1.64) 8,223 9.2 0.8 5.2Gulf Warehousing 41.50 (4.82) (0.84) 1,974 22.6 2.7 N/AQatar Gas Transport (Nakilat) 17.81 (3.73) (0.78) 9,974 12.9 5.8 5.6Transportation 20,170Qatar Exchange 509,085

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