Qatar’s stock market closed sharply lower on Monday as traders cited outflows of funds due to changes in MSCI’s emerging market index and concern about the impact of low oil and gas prices on the Qatari economy.
The main index tumbled 4.4 percent to a two-year low of 10,091 points in the heaviest trading volume for six months.
“Index compiler MSCI was due to add overseas-listed Chinese companies to its emerging market index after the close on Monday; EFG Hermes calculated in mid-November that by diluting Qatar’s weighting in the index, this would suck $92 million from the Qatari market.
That is not a large amount compared to Qatar’s market capitalization of $155 billion, but selling of stocks by passive funds in line with the MSCI rebalancing on Monday was met by an absence of buying interest”, said Jean-Francois Amyot, President of TCi Capital Inc.
Buying support has weakened because of concern about the impact of low energy prices on Qatari state finances and tightening banking sector liquidity.
The Qatari riyal dropped in the forward foreign exchange market last week as traders cited concern that Qatar might have trouble agreeing with banks on the pricing of a syndicated loan of up to $10 billion. That could prompt the government to borrow more domestically, further tightening liquidity.
The emir has said next year’s budget will restrain spending and officials have been talking of privatizing state companies, which could temporarily at least weigh on the stock market.
Qatar Gas Transport Co (Nakilat) rose 1.3 percent because it would be added to MSCI’s emerging markets index after the close; Gulf International Services plunged 9.4 percent because it was due to be deleted.
Several other major Qatari stocks fell sharply, with Islamic bank Masraf Al Rayan sinking 5.9 percent and Industries Qatar losing 4.8 percent.
Other Gulf stock markets performed better, with Dubai closing up 0.4 percent and Abu Dhabi ending 1.5 percent higher. Saudi Arabia was down 0.1 percent in late trade.