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MIDEAST STOCKS-Qatar falls further on FIFA probe, MSCI profit-taking
May 28, 2015 / 2:57 PM / 2 years ago

MIDEAST STOCKS-Qatar falls further on FIFA probe, MSCI profit-taking

* Qatar extends losses on FIFA criminal probe

* But most of decline due to profit-taking in Ezdan

* Saudi British Bank jumps after 1.5 bln riyal sukuk sale

* Petrochemicals pull back after oil drops

* Telecom Egypt tumbles on passive fund exodus

By Olzhas Auyezov

DUBAI, May 28 (Reuters) - Qatar’s bourse fell sharply on Thursday, driven by news of criminal investigations against FIFA soccer officials as well as by profit-taking after an upgrade of some stocks by index compiler MSCI. Most other Gulf markets were also soft.

The Doha index slid 2.7 percent, its biggest daily drop in five months, to 11,902 points, a five-week low, taking its losses to 4.1 percent since the announcement on Wednesday of high-profile arrests and corruption probes at world soccer’s governing body.

It is unclear if Qatar’s right to host the 2022 World Cup could eventually be revoked because of the investigations; Doha has denied any wrongdoing in its successful bid for the Cup.

Even if the right were revoked, there would be little damage to Qatar’s wealthy economy. The country could end up wasting billions of dollars on building stadiums and lose tourism revenue, but it could easily afford that.

However, the FIFA debacle is a potential blow to Qatar’s image, and local retail investors reacted badly to the news. The broad sell-off affected sectors from property and telecommunications to banking and heavy industry.

“Clearly news about the FIFA officials is impacting sentiment and has pushed the market lower, but on generally weak volumes,” said Akber Khan, director of asset management at Al Rayan Investment in Doha.

Ezdan Holding accounted for 43 percent of the market’s trading value, tumbling its daily 10 percent limit. The stock had previously surged on the decision to include it in MSCI’s emerging index at the end of this month; the jump in trading volume indicated passive funds tracking the index were already moving into the stock, prompting local investors to book profits. Despite the plunge, Ezdan is still sitting on gains of 8.9 percent since its inclusion was announced on May 12.

Another newly included stock, Qatar Insurance, was one of a few gainers and surged 5.3 percent on Thursday, indicating that local investors had not been buying it as aggressively as Ezdan.


MSCI picks also moved markets in the United Arab Emirates. Dubai’s index edged up 0.2 percent thanks to Emaar Malls, which surged 6.4 percent ahead of its inclusion in the emerging markets index.

But Abu Dhabi Commercial Bank, whose weighting in the MSCI benchmark is set to increase, tumbled 4.0 percent and dragged that emirate’s index 1.3 percent lower.

Saudi Arabia’s main index was nearly flat as losses in the petrochemicals sector were offset by other stocks.

Petrochemicals giant Saudi Basic Industries, whose profits are sensitive to oil prices, edged down 0.6 percent after Brent crude fell below $62 per barrel.

But Saudi British Bank jumped 2.8 percent after saying it had completed a 1.5 billion riyal ($400 million)private placement of 10-year subordinated Tier 2 sukuk.

Miner Ma‘aden rebounded after a bout of profit-taking and jumped 2.5 percent to 47.80 riyals, nearing a record intra-day high of 48.30 riyals which it hit in the previous session.

Mouwasat Medical Services jumped 4.9 percent after announcing the signing of a contract for construction of a new hospital building.

Egypt’s index edged down 0.6 percent as Telecom Egypt tumbled 5.0 percent.

MSCI excluded Telecom Egypt from its emerging markets index this month and passive funds tracking that benchmark now appear to have exited the stock. The company has said its board will consider buying some of its shares from the market; the board meeting will take place next week.



* The index inched up 0.04 percent to 9,757 points.


* The index climbed 0.2 percent to 4,001 points.


* The index lost 1.3 percent to 4,517 points.


* The index dropped 2.7 percent to 11,902 points.


* The index edged down 0.6 percent to 8,912 points.


* The index slipped 0.3 percent to 6,315 points.


* The index inched down 0.1 percent to 6,390 points.


* The index was flat at 1,366 points. (Editing by Andrew Torchia)

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