Qatar Stocks Gain as Fed Rate Increase Bets Recede; Dubai Drops

Qatari stocks rose to the highest in almost three weeks, tracking gains in global markets Friday that were fueled by the fading prospect of an increase in U.S. interest rates this year. Dubai shares declined.

The QE Index climbed 0.5 percent to 11,514.12 at the close in Doha, the highest since Sept. 16. Real estate company Ezdan Holding Group led the gains with a 3.2 percent jump on more than twice its three-month average daily volume. The Bloomberg GCC 200 Index, comprising the region’s biggest and most liquid shares, added 0.2 percent. The measure’s 10-day volatility reading dropped to 9.3 points from this year’s high of 51 on Aug. 30.

Gulf stock volatility and oil prices.

The U.S. added fewer jobs than expected in September, raising speculation the Federal Reserve will keep interest rates near zero for the rest of the year and buoying demand for higher-risk emerging market assets. While most of the currencies of the six nations that make up the Gulf Cooperation Council are pegged to the U.S. dollar, Qatar’s central bank said on Friday it wouldn’t follow a Fed rate increase because of high liquidity in local banks.

"The performance of Arab markets today reflects mixed sentiment regarding the timing of the Fed’s impending rates increase and the absence of local catalysts, which is keeping trading activity at depressed levels," said Cairo-based Hesham Wafa, an institutional sales trader at Mubasher Trade.

Traders exchanged about 193 million Qatari riyals ($53 million) worth of shares traded, while Dubai’s market saw about 289 million dirhams ($79 million) of stocks change hands, less than half both the markets’ one-year daily averages, according to data compiled by Bloomberg.

Fed Probability

The probability of a Fed rate increase in 2015, which would be the first in almost 10 years, fell to 33 percent Friday, compared with 46 percent before the data and 58 percent just a month ago.

The main stock gauges of Dubai and Abu Dhabi retreated 0.7 percent and 0.1 percent, respectively. In Saudi Arabia, the world’s biggest oil exporter, the Tadawul All Share Index advanced 0.4 percent, led by Al Rajhi Bank’s 0.7 percent increase. Brent crude climbed 0.9 percent to $48.13 a barrel on Friday.

Oman’s stock index advanced 0.2 percent, led by Oman Telecommunications Co.’s 0.9 percent gain after the company was added to investment bank EFG-Hermes Holding SAE’s list of the Middle East and North Africa’s top 20 equities. The gains also came after the central bank vowed to maintain the rial’s peg to the dollar, following similar pledges by Saudi Arabia and United Arab Emirates.

Egypt’s benchmark EGX 30 Index fell 0.7 percent. President Abdel-Fattah El-Sisi backed the central bank’s policy aimed at preserving foreign exchange by reducing imports, according to a statement from his office released today. The Egyptian pound was unchanged at 7.8301 per dollar after the nation’s central bank maintained its three-month-old peg to the dollar at a currency sale to local banks.

EFG-Hermes downgraded the country’s stocks to neutral, citing the limited potential of increased foreign ownership and constraints on the market and economy from capital controls. Foreign funds are overweight on Egyptian shares, with about $5 billion of holdings, and won’t sell them to fund redemptions due to delays in repatriating their money, according to the report. It removed Commercial International Bank Egypt SAE and ElSewedy Electric Co. from its Middle East and north Africa top 20 list.

Kuwait’s measure retreated 0.2 percent and Bahrain’s gauge decreased 0.4 percent. Israeli markets were closed for a public holiday.

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