Satyendra pathak
Doha
Positive profit growth and interim cash dividend announcements by several companies listed on the Qatar Stock Exchange (QSE) were a significant driver of market confidence in Qatar, QNB Financial Services (QNBFS) has said in a report released on Wednesday.
In the second quarter of 2024, companies listed on the Qatar Stock Exchange (QSE) showcased a positive trend in earnings, marking a 5.2 percent year-on-year (YoY) growth in aggregate profits.
This increase brought total profits to QR12.6 billion, up from QR12.0 billion in the same period of 2023. However, a sequential comparison reveals a 3.6 percent quarter-on-quarter (QoQ) decline in profits, underlining a mixed performance across the market.
"The boost in profits, alongside dividend announcements, reassured investors and contributed to overall market resilience. Listed companies showed strong performances despite challenges, with the banking sector emerging as the primary contributor to the growth. The telecommunications and insurance sectors also added to the positive momentum, while the real estate sector lagged behind, detracting from the overall performance,” the report said.
The banking sector was the largest contributor to the QSE’s aggregate earnings in the second quarter of 2024, responsible for 67 percent of the total YoY growth. The sector posted a 6 percent YoY increase in earnings, demonstrating the resilience of Qatar’s financial institutions. Major players such as QNB, QIB and other leading banks benefited from robust credit demand, increased lending activities, and improving economicconditions.
Despite this positive YoY growth, the banking sector saw a 2.5 percent decline QoQ, reflecting the broader market challenges during the quarter. This sequential decline can be attributed to softer macroeconomic conditions and lower lending volumes compared to the previous quarter.
The telecommunications sector exhibited notable performance during the second quarter, contributing 23 percent to the overall YoY profit growth. Despite global challenges such as inflation and supply chain disruptions, the telecom sector managed to grow its earnings by 3.6 percent QoQ, distinguishing itself as one of the few sectors to report sequential growth. This can be attributed to increased demand for digital services, ongoing network investments, and successful cost-cutting measures.
The sector’s performance reflects Qatar’s ongoing digital transformation efforts, which have positioned telecom companies as key beneficiaries of the shift toward a more connected economy.
The insurance sector posted a stellar performance in the second quarter of 2024, contributing 13 percent to the YoY profit growth. All listed insurance companies reported an expansion in their earnings, driven by higher premiums and better investment returns. The sector’s net profit increased despite a challenging global insurance market, where factors like natural disasters and regulatory pressures have weighed heavily.
The insurance sector remains a cornerstone of Qatar’s non-oil economy, bolstered by strong demand for life and health insurance products as well as growing corporate insurance needs.
Contrary to the strong performances of the banking, telecommunications, and insurance sectors, the real estate sector acted as a drag on aggregate earnings growth. It subtracted 16 percent from YoY growth, largely due to a challenging macroeconomic environment that included rising interest rates and stagnant property demand. While the sector saw marginal growth in its index by 0.1 percent QoQ, its overall contribution to profits was negative.
While YoY growth was positive, sequential declines were observed across most sectors in the second quarter of 2024. This mixed performance highlights the volatility and challenges faced by different industries.
A key highlight of the second quarter was the announcement of interim cash dividends by ten companies, including major players like QNB, QIB, QIIB and IQ. This was the first time many of these companies had declared interim dividends, which helped boost investor confidence. The announcements reflected the companies’ strong financial positions and commitment to returning capital to shareholders, even amid challenging market conditions.
These dividend payouts also underscored the growing maturity of the QSE, as more companies adopt dividend policies that align with international best practices. The introduction of interim dividends is likely to encourage further investment in Qatari equities, as it signals the long-term sustainability of corporateearnings.
The QSE Index rose by 1.2 percent during the second quarter, reflecting overall positive sentiment despite some sectoral weaknesses. The consumer goods and services sector saw the most significant rise in its index value, increasing by 3.8 percent, while the insurance sector lagged with a 4.4 percent decline.
In terms of trading activity, the consumer goods and services sector led the way with a 39.9 percent jump in traded value, reaching QR4.1 billion, compared to QR2.9 billion in 1Q2024. This was followed by a 37.1 percent rise in trading value in the real estate sector, which reached QR2.54 billion. On the other hand, the transportation sector experienced the steepest drop in trading interest, with a 29 percent fall in traded value.
Despite the overall positive performance, the insurance index continued its downward trajectory, falling by 4.4 percent, following a 9.9 percent drop in the first quarter of 2024. However, the sector remained attractive to income-seeking investors due to its dividend yield of 4.9 percent, which was higher than the QSE’s overall dividend yield of 4.8 percent.
The first half of 2024 has demonstrated the resilience of Qatar’s economy and its listed companies. Aggregate profits for the first half of the year grew by 5.5 percent YoY to QR25.7 billion, compared to QR24.4 billion in the first half of 2023. While the second quarter showed some sequential declines, the market remains optimistic about future growth, especially with interim dividend policies boosting investor sentiment.
Looking ahead, the banking sector is expected to continue driving growth, supported by stable credit demand and favourable regulatory policies. The telecommunications and insurance sectors also present promising opportunities, given their robust performances in the second quarterof 2024.
However, challenges persist, particularly in the real estate sector, which remains under pressure from macroeconomic factors. Additionally, the industrials sector will need to navigate external pressures such as fluctuating commodity prices and global supply chain disruptions.
In conclusion, the QSE’s second quarter of 2024 demonstrated a resilient performance, buoyed by strong sectoral contributions, robust interim dividend announcements, and steady overall market confidence. While some challenges remain, Qatar’s economy and its listed companies are well-positioned for growth in the second half of the year.