(MENAFN - The Peninsula) It was a red Tuesday for the Qatari bourse yesterday as stocks tumbled a massive 8.3 percent with the electronic board on the trading floor a streaming red with no glint of green in sight.
The loss to investors at Qatar Exchange on a single trading day was a staggering QR27.34bn ($7.49bn).
The exchange's index shed more than 595 points at the close of trading to end up at 6,598.
Before the market closed for Eid Al Adha on November 25 the benchmark was hovering above 7,000 (at 7,193.38 points), a psychologically significant level.
Yesterday's steep fall was triggered by panic selling by foreign institutional investors (FIIs), mainly portfolio and pension funds apparently in a knee-jerk reaction to the unfolding crisis in neighbouring Dubai.
Their sell volumes soared to a record 7.7 million on a single day with the trading value peaking at a shocking QR361.6m.
Of the total traded shares of non-Qatari investors (both individuals and institutions), offloading accounted for an incredible 63.87 percent.
Interestingly, though, net buying support from retail foreign investors was stronger as was the case with their Qatari counterparts.
Analysts said the huge sell-off by the FIIs wasn't unexpected as their buy and sell decisions are centralised.
"It is a psychological reaction," stock analyst Bashir Al Kahloot said of the index going into a tailspin. "There is absolutely no justification for the sharp decline. The market fundamentals remain strong. The national economy is robust," a shocked Al Kahloot told The Peninsula as Qatar Exchange's main index raced down more than 650 points amid the panic selling.
In no time all gains of the current year were neutralised. With panic buttons pressed, state-backed local institutions and corporate investors launched a heroic recovery effort at almost the fag-end of trading hours.
They pumped massive funds into the market to offset the losses but, according to analysts, it was a little late.
Their buy volumes peaked at almost nine million but the index loss that would have inched up to nine percent at the close of trading came down only marginally to 8.3 percent.
Not unexpectedly, banking entities took a massive beating with stocks of Qatar National Bank (QNB), Commercialbank and Doha Bank which have sizeable exposure to the UAE, falling over nine percent.
Ten percent is the cap by which shares can fluctuate either way — up or down — on Qatar Exchange on any trading day. Some 11 of the 44 listed shares fell more than nine percent led by Doha Insurance (9.91 percent), and also in a record of sorts as many as 41 of the 44 listed entities were down.
Only one company which is into the entertainment business, which generally does well in times of recession and crisis, had its shares look up. Qatar Cinema's shares advanced yesterday on the exchange. But retail investors by and large knew the fall was a knee-jerk reaction of foreign institutions. "The decline isn't justified," said Mohamed Darwish as he watched in distress stocks tumbling with red flashes all over the electronic board.
By Mobin Pandit & Mohammed Saeed