By Satish Kanady
DOHA: Qatar Exchange’s (QE) benchmark index logged one of its biggest declines of the year yesterday, on oil slump.
The benchmark index fell below the psychological barrier of 10,000-mark to finish at 9,643.65, shedding 3.71 percent, or 371.17 points.
The market was 21.5 percent down year-to-date.
The tumult came ahead of the highly anticipated Federal Reserve policy meeting.
Investors have broadly sold banking and industrial shares.
Retail investors were the net sellers and were busy pulling out money from blue chips. The entire shares in banking and industrials sectors ended in red. Banking sector tumbled 3.86 percent as the industrials sector lost 4.07 percent. Industrials sector heavyweight Industries Qatar (IQ) plunged 4.97 percent and Gulf International, which lost its presence in MSCI emerging market index, tumbled 7.41 percent. QIB and Masraf Al Rayan were the worst hit banking stocks. As QIB shed 6.64 percent Masraf Al Rayan declined 6.34 percent. Banking major QNB was down by 2.15 percent.
A further weakening in oil prices for the last month or so to below $40, coupled with weak equity markets globally are the key reasons for weakness in stocks in Qatar. Price of oil is not only important for government revenues but it is also an indicator that affects investor confidence in the GCC region, Afa Boran, Head of Asset Management, Amwal told The Peninsula.
“Globally, this week’s expected Fed decision on interest rates is also an important focus for investors, although I don’t expect a major increase. US Fed rates are currently very low at 0.25 percent compared with 10 year rates of around 2.2 percent.”
“There could be a small increase but that is unlikely to have a material impact on long term yields and hence stocks. More important is the health of US economy. Stock valuations in Qatar are cheap but so in many other emerging markets. Outlook for oil prices need to improve to lift stocks in the region in the short term,” he said.
The Peninsula
