Qatar's Stock Gauge Posts Best Quarter Since 2014: Inside EM

(Bloomberg) -- Qatar’s main equity gauge advanced, adding to the index’s gains as it posts its biggest quarterly jump in four years. Benchmarks in Saudi Arabia, Dubai and Oman also rose.

The QE Index stocks will probably outperform peers in the last quarter as MSCI Inc.’s rebalancing in November attracts foreign cash, said Talal Samhouri, head of asset management at Doha-based Amwal LLC. Investors also will re-position in December for the dividend season in the first quarter, which should lead to further upside, he said.

“We like petrochemicals, local banks and new entrants into the EM indices,” Samhouri added. Amwal is also bullish on fixed income markets in the Gulf.

Qatar’s main stock gauge is the second-best performer in the world in dollar terms this year, only beat by Norway’s benchmark, data compiled by Bloomberg show.

HIGHLIGHTS:
  • Dubai’s main benchmark rises on Sunday, but still declines in September, its second monthly drop in a row
  • Saudi Arabia’s Tadawul All Share Index is the biggest gainer in the Gulf on Sunday. It posts its first monthly increase in three
  • Egypt’s EGX30 Index finishes down for the first time in four sessions, extending its decline in Sept. to near 9%
  • MSCI Emerging Markets Index fell 0.3 percent last week, while a gauge of emerging-market currencies advanced a third week in a row

COMMENTARY:

  • Further rate hikes by the Fed will be imported into the Gulf Cooperation Council countries due to the peg to the U.S. dollar, “keeping a lid on credit growth and pushing up government borrowing costs,” Ehsan Khoman, head of MENA research and strategy at MUFG Bank, writes in a note.
    • While higher rates are unlikely to derail the economic recovery, “it is another reason to expect economic growth to stay before long-run equilibrium rates in the near term”
    • “If we are right in expecting oil prices to drop back (our forecast is for Brent to average $74.3/barrel and WTI to average $68.3/barrel in 2018) and geopolitical tensions linger, spreads are likely to widen again meaning that interest rates in the GCC are likely to rise at a faster pace than those in the U.S. in the near term,” he says

MIDDLE EASTERN MARKETS:

  • Qatar’s QE Index advances 0.3% on Sunday
    • Industries Qatar +2.2%, QIB +1%
    • READ, Sept. 18: Rebounding Qatar Stocks Shine in 2018 as Dubai Lacks Sparkle
  • Egyptian stocks fall 0.1%, reversing gains of as much as 1.2%
    • READ: Egypt’s Top Stock Set to Renew Gains as CEO Sees Refinery Boost
  • The Tadawul All Share Index climbs 1.3%, trimming its loss this quarter to 3.8%. Al Rajhi Bank rises 2%, biggest contributor to Sunday’s gain
    • READ: Saudis Target Higher Spending to Bolster Economic Growth
    • Zain KSA rises 2.1%, the most in two weeks and recovering from a drop of 2.1% on Thursday, amid a broader rally in the telecom sector, says Muhammad Faisal Potrik, head of research at Riyad Capital.
      • Says that co. has “good fundamentals” and that its higher exposure to data is “a key advantage going forward”, but the declining number of expats in Saudi Arabia could “hurt Zain more than the other operators"
      • Zain to Pursue Saudi Rights Issue More Actively if Shares Rise
  • Dubai’s DFM General Index rises 0.3%, Abu Dhabi’s ADX General Index retreats 0.3%
    • In Dubai, Emaar Properties gains 1%, biggest contributor to index
    • Emirates NBD rises 1.1%. It could rise in the near term amid renewed expectations that a deal in Turkey will go through, says Issam Kassabieh, senior financial analyst at Mena Corp. in Dubai
      • The bank’s shares have advanced 17% this year vs 16% loss in the main index during the same period
      • “Stock performance is being fueled by the recent interest rate increase and its results for 1H, which are about to get better with 3Q if provisions remain under control”
      • READ, on Aug. 13: Dubai Bank’s Bet on Turkey Is $1 Billion Cheaper But Riskier
    • Arabtec extends gain in the past two sessions to 6.5%, after it said on Sept. 27 that one of its subsidiaries is part of a consortium that was awarded a AED3.2b project with Adnoc LNG, which will start in Oct.
      • The share of Arabtec’s unit within the total contract value is expected to be between 40%-50%
  • Kuwait’s is little changed, ends the quarter 9% higher
    • NBK, the country’s biggest lender, rises 0.7% on Sunday, extending gain in the past three months to 11%
  • Oman’s main stock index advances 0.4%, while Bahrain’s declines 0.8%, even as its Gulf allies are said to weigh a five-year aid package for the island

OTHER EMERGING MARKETS:

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