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Qatar: looking for a catalyst

Posted: 02/26/2013 - 12:10 pm

On January 29, we highlighted the successful bounce off last year’s key resistance line in the Qatari index (QSI) following the upside break which took place in early 2013. The move carried positive implications for the Qatari market and had us maintain our bullish bias towards the index until otherwise indicated by the price action (read: Qatar: still positive).

Indeed, the Qatari index gained 1.5% in the following two weeks marking a new marginal high at 8831. However, the last four sessions have seen the index give back its gains and move towards the initial breakout line.
It is worth noting here that much of the sell-off in the last few sessions was the result of some of the key underlying stocks in the market going ex-dividend. Doha Bank, Qatar Islamic Bank and Qatar Electricity & Water are some examples.

In other words, we would not read very much into the latest market pull-back and we focus our attention on the heavyweights, mainly Industries Qatar and Qatar National Bank, and their short-term direction bias which will likely dictate the upcoming trend in the market – both stocks seem to be in neutral trading mode at this point.

With no visible catalyst for the Qatari market at this point, we take a neutral stance and look for potential buying opportunities in stocks that could offer attractive reward/risk profiles. A move outside the current trading range of the heavyweights will also help gauge the next directional move in the market.

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