Qatari stocks closed at a record high as local institutional investors bought shares amid speculation a weighting increase by index provider MSCI Inc. will attract new cash to the bourse.
The benchmark QE Index rose 0.7 percent to 13,776.19, the strongest finish since Bloomberg began collecting the data in 1998. Qatar Islamic Bank SAQ, the Shariah-compliant lender with the fourth-biggest weighting on the gauge, surged 6 percent to highest in almost six years. Qatar International Islamic Bank added 2.8 percent and lender Masraf Al Rayan climbed 1.1 percent.
The country’s stock market was included in MSCI’s Emerging Markets Index in June, where its weighting is poised to increase to 0.57 percent from 0.46 percent when changes announced in the index provider’s most recent quarterly review take effect on Sept. 1, according to a note published last week by Cairo-based investment bank EFG-Hermes Holding SAE. That could attract as much as $97 million of additional investment, mainly into Industries Qatar QSC and Qatar National Bank SAQ, EFG-Hermes said.
“The index rebalancing will be at the end of the month so we have seen active investors pick up Qatari shares ahead of that,” Amer Khan, senior executive at Shuaa Asset Management in Dubai, which oversees more than $300 million in assets, said in a phone interview today. The sentiment has improved and “there are local institutions buying,” Khan said.
QIB jumped to 123.80 riyals. Masraf Al Rayan rose to 57.40 riyals, taking its advance this year to more than 83 percent compared with a 33 percent increase for the QE Index. QIIB climbed the most since July to 86.80 riyals. Industries Qatar gained 1.4 percent to 188 riyals. QNB was unchanged at 194.50 riyals.
The 14-day relative strength of Qatar’s gauge climbed to 70.8 today, the highest since June 1. A level of 70 or above indicates to some analysts that securities are overbought and poised for a selloff. The index plummeted more than 16 percent in June, the biggest monthly drop since January 2009.
Investor concern that Qatar, which holds the world’s third-largest natural-gas reserves, may lose the right to host the 2022 soccer World Cup spurred the selloff. Soccer’s governing body has said a panel looking into the possibility of corruption in the awarding of the tournament will deliver its report in the first week of September, according to a July 21 statement on its website. Qatar has denied the allegations.
“Most people think that it isn’t going be as big a deal as they thought,” Khan said.