* Qatar market picks up in last few weeks
* Q1 blue chip earnings are a trigger
* But local retail investors still on sidelines
* Many waiting for Doha Global, Barwa Bank IPOs
* Index near major technical resistance
By Nadia Saleem
DUBAI, May 9 (Reuters) - Institutional investors have finally begun showing interest in Qatar's beaten-down stock market but local retail investors are much less enthusiastic, and that may prevent any sustained rally of the bourse.
Qatar has underperformed other Gulf stock markets for much of this year. Investors were disappointed by the slower-than-expected launch of some of the country's multi-billion-dollar infrastructure building projects, and investment money has been sucked away to more active regional markets such as booming Dubai.
In the last few weeks, however, that pattern has started to change. The main Qatar index
Qatar is now up 6.0 percent year-to-date - still a weak performance compared to Dubai
The trigger has been strong first-quarter earnings, beating analysts' forecasts, from several key blue chips including petrochemicals and metals producer Industries Qatar
"We have a good allocation in Qatar - driven by the fact that it is still trading at what we think is an unjustified cheap value," said Fadi Al Said, Dubai-based head of investments at ING Investment Management.
"We are buying slowly to take advantage of the underperformance and the above-average dividend yield."
Al Said said his top stock picks were those offering exposure to growth sectors of the economy as well as high dividend yields; Qatar National Bank
Qatari stocks offer some of the highest annual dividend yields in the region, of up to 8 percent.
"We've seen money coming back into the markets, with strong interest in industrial companies that offer great opportunities," said Rami Sidani, Schroders Middle East head of investment in Dubai. "The yield is attractive in blue chips, and this will continue to tempt investors."
Ahmed Shehada, head of trading at Qatar National Bank Financial Services, said: "The market has been very healthy - foreigners staged a comeback and banks are doing well.
"Our market is lagging across the board. There is still a lot of value compared to others in the region. We might see consolidation in the market around these levels, but I see another 2 to 3 percent move up on the index."
RETAIL
In the recent rally, however, Qatari retail investors have generally remained absent or been net sellers, even as foreign institutions have bought shares, analysts and fund managers say.
This can be seen in the fact that weekly trading turnover remains moderate by historical standards; it has risen, but is still only about half the levels seen during the last big market rally around the start of 2011.
The Qatari investors have been freeing up cash to participate in large upcoming initial public offers of shares, which are only open to local citizens during the subscription period.
Last month authorities said Doha Global Investment Co, a new investment firm backed by assets from the sovereign wealth fund, would conduct a $3 billion initial public offer of shares in May as part of an effort by the tiny Gulf state to share its riches with local citizens.
The company has promised an attractive dividend yield of 5 percent in the first year. Ahead of its listing, local retail investors are likely to save their money for the IPO, which depending on the mix of assets could be a game changer for the market, said Yassir Mckee, Doha-based wealth manager at Al Rayan Financial Brokerage.
Stock traders believe that because of its size and complexity, the Doha Global IPO could well be delayed beyond May, though authorities have not confirmed this.
"It's hard to specify. There is conversation with the regulator," Qatar Exchange chairman Hussain al-Abdulla told reporters on Wednesday when asked about the timing. He did not elaborate.
So retail investors may continue to sit on the sidelines for at least a few more weeks. Meanwhile Barwa Bank, a Qatari lender part-owned by an arm of the sovereign wealth fund, has said it plans to raise 2.05 billion riyals ($563 million) through two share sales including a public float on the Doha bourse. Its timing is also not clear, and the uncertainty may be another short-term deterrent to retail investors.
Mckee said he expected more infrastructure projects in preparation for Qatar's hosting of the 2022 World Cup soccer tournament to be launched in coming months, and this could boost the market.
"There will be more announcements over the next quarter or two. They have to mobilise projects soon because time is running out. Many of these are five- to seven-year projects which will need multiple contractors."
For now at least, the technical outlook for the market is not ideal. The index closed at 8,858 points on Wednesday, near major chart resistance between 8,875 and 8,910, its peaks in early 2012.
"The rally started back three weeks ago, so it's not in its early stages. Some profit-taking and a bit of a pull-back at this point would be healthy," said Bruce Powers, a technical analyst and corporate advisor at Orpheus Capital in Dubai. He identified 8,750 and 8,650 as possible support levels.
(Editing by Andrew Torchia)
((nadia.saleem@thomsonreuters.com)(+97143664256)(Reuters Messaging: nadia.saleem.thomsonreuteres@reuters.net))
Keywords: MARKETS WEEKAHEAD/MIDEAST
