Qatar's Stock Gauge Posts Best Quarter Since 2014: Inside EM

(Bloomberg) -- Qatar’s main equity gauge advanced, adding to the index’s gains as it posts its biggest quarterly jump in four years. Benchmarks in Saudi Arabia, Dubai and Oman also rose.

The QE Index stocks will probably outperform peers in the last quarter as MSCI Inc.’s rebalancing in November attracts foreign cash, said Talal Samhouri, head of asset management at Doha-based Amwal LLC. Investors also will re-position in December for the dividend season in the first quarter, which should lead to further upside, he said.

“We like petrochemicals, local banks and new entrants into the EM indices,” Samhouri added. Amwal is also bullish on fixed income markets in the Gulf.

Qatar’s main stock gauge is the second-best performer in the world in dollar terms this year, only beat by Norway’s benchmark, data compiled by Bloomberg show.

COMMENTARY:

• Further rate hikes by the Fed will be imported into the Gulf Cooperation Council countries due to the peg to the U.S. dollar, “keeping a lid on credit growth and pushing up government borrowing costs,” Ehsan Khoman, head of MENA research and strategy at MUFG Bank, writes in a note.
  • While higher rates are unlikely to derail the economic recovery, “it is another reason to expect economic growth to stay before long-run equilibrium rates in the near term”
  • “If we are right in expecting oil prices to drop back (our forecast is for Brent to average $74.3/barrel and WTI to average $68.3/barrel in 2018) and geopolitical tensions linger, spreads are likely to widen again meaning that interest rates in the GCC are likely to rise at a faster pace than those in the U.S. in the near term,” he says

MIDDLE EASTERN MARKETS:

OTHER EMERGING MARKETS:

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