Qatar shares drop on speculation MSCI-upgrade gains are overdone

Oman, Kuwait decline; property stocks in the UAE capital drag the benchmark lower
Qatar shares drop on speculation MSCI-upgrade gains are overdone
PROFIT RISE: Dubai-based contractor Drake & Scull reported a 21 percent rise in net profit after the market closed on Wednesday (Getty Images)
By Bloomberg
Thu 12 May 2011 11:15 AM

Qatar shares fell for the first time
in five days on speculation gains prompted by optimism that index provider MSCI
Inc. will upgrade the Arabian Gulf nation to an emerging market in June may be
overdone.

Masraf Al Rayan, Qatar’s
second-biggest Islamic lender, retreated the most in more than a week.
Industries Qatar, the Middle East’s second-largest petrochemicals company,
decreased 1 percent. The QE Index dropped 0.6 percent, the biggest decline
since April 24, to 8,711.49 at the 1:15 pm close in Doha, trimming the gain for
the week to 3.1 percent. The Bloomberg GCC 200 Index of regional stocks slipped
0.2 percent. Crude oil retreated as much as 3 percent.

“We have seen a strong rally the
past few days,” said Sebastien Henin, who helps oversee $110 million at The
National Investor in Abu Dhabi. “Investors are waiting for MSCI’s announcement
on whether or not Qatar will be included in the emerging market index. The
closer we come to the announcement, the more volatility we will see.”

Stocks in Qatar and the UAE have
rallied on investor optimism the countries will be raised from frontier market
status at MSCI. The decision will be announced in June and will take effect in
May 2012. Foreign-ownership limits on stocks and “efficiency” are some issues
that both countries face, Manuel Rensink, head of Middle East and North Africa
at MSCI, said May 3. Size and liquidity are “not a major hurdle for the UAE and
Qatar,” he said.

Templeton Asset Management Ltd’s
Mark Mobius, who oversees about $54bn in emerging markets, said last month the
countries stood a good change of securing an upgrade, though the impact may be
“not that great” because they will have a “relatively small” weighting on the
index.

The six nations of the Gulf
Cooperation Council, including the UAE and Qatar, supply about a fifth of the
world’s oil. Crude for June delivery declined to as low as $95.25 a barrel in
electronic trading on the New York Mercantile Exchange. On Wednesday, it fell
5.5 percent.

Masraf Al Rayan retreated 0.8
percent, the most since May 2, to QR23.7. Industries Qatar dropped the most
since May 1 to QR147.

In Dubai, Tamweel, the home finance
company majority owned by Dubai Islamic Bank, surged 6 percent to 85 fils on
speculation the drop in the previous two days was overdone. The company’s
shares tumbled 19 percent in the first two trading sessions since November 20,
2008.

“Investors started seeing value at
current prices,” said Mohammed Galal, head of foreign institutional sales
trading at HC Securities in Dubai.

Dubai’s DFM General Index slipped
0.7 percent. Kuwait’s SE Price Index, Abu Dhabi’s measure and Oman’s MSM30
Index declined 0.1 percent. Bahrain’s gauge rose less than 0.1 percent,
snapping a seven-day drop. Saudi Arabia’s market was closed for the weekend.

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