Qatar Stocks Drop as MSCI Cancels Mesaieed Decision; Dubai Falls

Qatar shares declined the most in more than three weeks after index provider MSCI Inc. reversed a decision to add Mesaieed Petrochemical Holding Co. to its emerging markets gauge. Dubai stocks also fell.

Qatar’s benchmark QE Index slid 0.7 percent, the steepest drop since July 24, to 13,416.30 at the close. Lender Masraf Al Rayan led the retreat, losing 1.3 percent. Mesaieed, which isn’t included in the index, plunged 7.8 percent to end a four-day rising streak. Dubai’s DFM General Index slipped 0.5 percent.

MSCI, whose gauges are tracked by investors managing about $9 trillion in assets, added Mesaieed to its Emerging Market Index Aug. 13 as part of a quarterly review. The index provider reversed the decision in an Aug. 14 statement posted on its website, citing the petrochemical company’s equity ownership limits. The Qatar bourse, along with those of the United Arab Emirates, was included in MSCI’s developing markets measure in June.

“We expect Mesaieed to remain fairly weak after the MSCI announcement,” Bobby Sarkar, Doha-based head of research at Qatar National Bank Financial Services, said in a telephone interview today. “It’s a mistake, which has caused unnecessary volatility in the stock.”

Ownership Limit

The company has a maximum ownership limit of 1 million shares per individual shareholder, or about 0.08 percent of its total equity, which “may significantly impair the ability of large institutional investors to invest,” according to the MSCI statement.

Mesaieed, which surged 16 percent last week, tumbled the most in almost five months to 34.85 riyals. Masraf Al Rayan dropped to 54.80 riyals. Qatar’s main measure, which has risen 29 percent his year, last week posted the biggest weekly gain in more than a month.

The 14-day relative strength of Qatar’s benchmark index climbed to 67.4 the day MSCI released its quarterly review, from about 51 at the start of the month. A level of 70 indicates to some analysts that securities are overbought and poised for a selloff. Close to 1.5-times the 12-month daily average volume of shares traded in Qatar today, compared with 16 percent in Dubai.

The ADX General Index slipped 0.7 percent, led by a 1.3 percent drop in shares of First Gulf Bank PJSC, whose weighting accounts for about 25 percent of the gauge. Abu Dhabi Islamic Bank PJSC, the largest Sharia-complaint lender in the emirate by assets, retreated 2.9 percent, the most since July 23.

Egypt Gains

Egypt’s EGX 30 Index extended gains to a fifth day, advancing 0.6 percent to 9,443.81, the highest close since July 2008. Real estate developer Six of October Development & Investment Co. climbed 1.1 percent to 43.88 pounds after announcing plans to build 1,000 housing units in Cairo.

The government of the Arab world’s most populous country sold 2.5 billion Egyptian pounds ($350 million) of three-month Treasury bills and 3 billion pounds of nine-month notes, according to central bank data on Bloomberg. Egypt is seeking to resume talks next year with the International Monetary Fund for about $10.4 billion of financing, Al Masry Al Youm newspaper reported, citing Egyptian Finance Minister Hany Kadry Dimian.

Saudi Arabia’s Tadawul All Share Index climbed 0.5 percent. Muscat’s MSM 30 Index added 0.2 percent and Kuwait’s SE Price Index gained 0.4 percent. Bahrain’s BB All Share Index was little changed.

Iraq Security

The Iraq Stock Exchange General Index rose for a fourth day, surging 7.1 percent to 101.16, the biggest jump since January 2012. The yield on Iraq’s debt due January 2028 fell 60 basis points last week, the most since January 2010, on optimism Prime Minister Nouri al-Maliki’s resignation will improve the country’s security.

“The Iraq Stock Exchange reacted positively to Maliki’s decision to cede power without issue,” Geoffrey Batt, managing director of the $110 million Euphrates Iraq Fund, said today in an e-mail from New York. “Many believe the country will be able to more effectively address its problems with Maliki gone.”

Israel’s TA-25 Index declined 0.1% percent to close at 1,387.45 in Tel Aviv as the country prepared to resume talks with Hamas ahead of tomorrow’s expiry of a cease-fire in the Gaza Strip.

Israel’s 10-year government bonds increased, with yields on the March 2024 securities dropping three basis points, or 0.03 of a percentage point, to 2.63 percent, according to data compiled by Bloomberg.

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