BY MOBIN PANDIT
DOHA: Qatar’s stock market plunge in the past two days has wiped out over QR41bn ($11.25bn) in investor wealth, but an analyst said there was nothing to worry as market fundamentals remained strong.
Qatar Exchange’s main index has fallen from 11,345.53 on Thursday when the market closed for the weekend, to 10,572.5 yesterday.
The drop has been a substantial 773 points, or almost seven percent (6.9 percent, to be precise).
The market cap which was almost QR600bn (QR599.76bn) on Thursday, was down to QR558.7bn at the close of trading yesterday.
The fall was in reaction to the global stock market crash, said Abdullah Al Khater, stock and financial analyst.
“The stocks should stabilise in time — sooner rather than later,” he said in remarks to this newspaper. “Qatari stocks are not overvalued. There is no bubble, so investors should not panic and sell. This is the worst time to sell, so stay put.”
But Nasser Al Khaledi, CEO of Qatar-Oman Investment Company, a listed entity, said the plunge of Qatari stocks amidst a global trend showed the market’s vulnerability to outside influence.
Foreign ownership limits in Qatari stocks are much higher than wanted so foreign portfolios are manipulating local stocks,
he said. “You have opened up the market and you have upgraded it but you don’t have the tool to stop manipulations,” Al Khaledi told this newspaper.
So this is the price you pay. Qatari companies have good earnings. They have liquidity. So why should Qatari stocks suffer so much in the wake of a global crash? he asked.
“It is simply because you lack effective regulatory mechanisms and you have opened up the market so much to foreigners.”
Al Khater, on the other hand, was of the view that since Qatari stocks fell only 1.65 percent yesterday while the US and Chinese markets plunged massively, the Qatari market remains resilient and strong. “I would describe the fall of the Qatari market as positive because it was marginal amid a global crash,” argued Al Khater.
Investors were panicking globally and were going on a selling spree. The trend was being followed in the Middle East, he said.
Qatari shares remain reasonably priced and there is no bubble, so the fall doesn’t really mean anything, claimed Al Khater.
It is the regulatory authority of the Qatari bourse which is to blame, said Al Khaledi. Allowing up to 49pc ownership to “outsiders” in Qatari listed entities means that local shareholders are victimised.
The biggest loser in the recent Qatari stocks plunge is the government as it has substantial shareholdings, he said. Take banks as an example.
The market should have been broad-based by now. There should have been enough local portfolios. “Our market remains so small,” rued Al Khaledi. And hence it is easily manipulated by foreigners.
About falling global oil prices that were affecting the GCC economies rather badly, the CEO painted an even gloomier picture and said the Iran deal could see the crude rates even falling further to $30s and $20s per barrel in the days to come.
“The $40 per barrel barrier is already broken … the slide can continue.”
Pooh-poohing job layoffs by energy companies in the GCC, including Qatar, in the wake of crude prices tumbling, Al Khaledi said that that actually showed that these companies don’t have able management.
“Why should you, as a company, hire such staff that one day you need to remove them? This means you hired people without actually needing them,” he said.
“This is not management … you suddenly fire 1,000-2,000 people.”
Al Khaledi said that a lot of turbulence should be expected in the region due to falling oil prices and it should affect all aspects, including economy.
He even hinted that state subsidies in the region could be affected and austerity measures could be initiated by governments if the present trend continued.
But Al Khater, striking an optimistic note, said cash flow is the most important thing for Qatar and that wouldn’t be affected due to budget surplus and the safety net of the sovereign wealth fund.
Moreover, he said, natural gas prices were not affected as much as oil as being cleaner fuel, their rates were protected by long-term sale and purchase deals.
“From what I know is that natural gas prices are a lot stable.”
And in the final analysis, public spending on infrastructure development projects for the 2022 event should keep the Qatari economy buoyant, Al Khater hinted.
THE PENINSULA
