DOHA: Higher allocations for public spending, particularly on infrastructure development projects, in the budgetary estimates unveiled for the current financial year (2013-14) last Monday, failed to pep up Qatari equities.
The stock market (Qatar Exchange) showed only marginal gains at the close of trading yesterday, with the main index inching a mere 48 points, or 0.57 percent, up to 8,549 points.
The trading value, which is a measure of liquidity, remained restricted to QR163.78m — only slightly up from QR159.37m witnessed early on Monday when the budget was not announced.
Similar was the situation with the trading volumes which also showed marginal improvement, from 3.7 million shares on Monday to 4.1 million yesterday. The number of deals concluded too remained limited to under-2,600.
Out of the 42 listed stocks, 20 gained at the end of trading, but that could hardly help lift trading sentiment on a day the announcement of the state budget should have made some, if not a strong, impact.
Analysts lamented a lack of liquidity to a mix of factors, prominent among them being the perception of the private sector that higher outlays for mega public projects in the state budget would mainly benefit foreign companies as they would be awarded the contracts.
The government, analysts argue, should provide more support to the private sector and ensure their direct participation, albeit to some extent, in the mega development projects.
Local corporate investors offloaded more stocks yesterday than they lapped up and similar was the case with ordinary Qatari investors.
Their buy volumes were much less than their sell quantum.
A highlight, however, was that foreign institutional investors continued with their Monday’s buying spree and lapped up stocks worth QR60.88m, far exceeding their sell volumes (worth QR43.23m).
On Monday, though, their (foreign institutions) sell volumes were meagre (QR28.33m) as compared to their buys — wroth an impressive QR125.52m.
Talking about the budget, prominent stock and financial analyst, Bashir Al Kahloot, told this newspaper last evening that much of the talk about higher spending in the current budget triggering inflation was exaggerated.
“Qatar isn’t raising the money by printing currency notes to spend on development projects, he said. “So the question of increased spending driving prices up does not arise.” Additionally, most mega projects are to be handled by foreign companies and not local entities so that wouldn’t have much impact on the local real estate sector.
“Actually, it’s too early to talk about inflation in the context of higher spending outlays in the budget,” Al Kahloot said.
About real estate, he said large land acquisitions were yet to happen. “What we are seeing in terms of sale and purchase at the moment is mostly retail,” he argued.
He added: “We hear that the government wants to make large acquisitions of land to build stadiums for the coveted FIFA 2022 event. The current budgetary estimates (2013-14), however, do not include those planned acquisitions,” he said.
The Peninsula
