Market Report

The Qatar Exchange (QE) Index increased by 35.25 points, or 0.40%, during the week, to close at 8,792.84 points. Market capitalisation increased by 0.22% to reach QR476.8 billion as compared to QR475.7 billion at the end of the previous week. Of the 42 listed companies, 24 companies ended the week higher, 16 fell and 2 remained unchanged. Gulf International Services (GISS) was the best performing stock with a gain of 7.35% and is now up 19.33% year-to-date (YTD). Islamic Holding Group (IHGS) was the top decliner, down 4.55%; the stock is down 14.34% YTD.

Sequester can impact global markets in the short-term. In early January 2013, investors were relieved when US legislators reached a last-minute deal to avoid the much dreaded “fiscal cliff”’. However, the fiscal cliff deal only addressed the taxation side of the issue and delayed the decision on spending cuts to end February 2013. Hence, US legislators are again gearing up for another round of negotiations regarding the other part of the fiscal cliff. For the benefit of readers, the sequester has its roots in the bitter 2011 debt ceiling negotiations and was part of the US Budget Control Act. The debt ceiling was raised in 2011 in exchange for ~$1.1 trillion in spending cuts over a decade ($85 billion in 2013). If no deal is reached then automatic across the board cuts will go into effect on March 1, 2013. However, in our view, given the recent track record of reaching a deal at the last minute and the fact that the US Congress has already agreed to temporarily suspend the debt ceiling until May 2013, a deal on spending cuts could also be reached. Nonetheless, the likely last-minute nature of reaching a final agreement on the deal could create volatility.

For the Qatari market, this could imply net selling by foreign institutional investors (FII). We do note that FIIs have been bullish YTD with net buying of ~QR568 million (mn) versus net selling of QR63mn and QR427mn from Qatari institutions and Qatari individuals, respectively. This is despite the fact that foreign institutions turned bearish for the week with net selling of QR23.3mn, while Qatari institutions were net buyers of QR107.0mn.

Read more: http://www.gulfbase.com/news/weekly-market-report/229416