- Secretary-General Hassan Al-Thawadi (3rd L) of Qatar’s Supreme Committee for Delivery and Legacy, the nation’s 2022 World Cup organising committee, speaks during a news conference to announce the start of work on the Al-Khor Stadium in Al-Khor in June.
- Reuters
Investors in Qatar are likely to hold their breath, and cash, this month: Well, at least until FIFA reports on its investigation of the bidding process for 2022 World Cup – which was awarded to the Arab Gulf country.
Qatar’s bid committee is facing allegations of corruption, which it has strenuously denied. The result of the probe, originally scheduled for completion in July, is expected in the first week of September.
For many, the FIFA World Cup could be a make-or-break deal in terms of their investment strategy for Qatar. After all, the gas-rich state plans to spend tens of billions of dollars on infrastructure linked to the world cup – projects that are expected to lift the overall economy, while providing huge growth opportunities for local companies.
And investors looking to benefit from this growth have flocked to the local stock market, which was recently promoted to emerging status by index compiler MSCI Inc. – potentially unlocking hundreds of millions of dollars in additional investments from funds tracking such benchmarks.
“We believe that any negative ruling from FIFA regarding the 2022 World Cup could trigger a sell-off in the market,” an analyst at EFG Hermes said in a note to clients.
Such a reaction wouldn’t surprise, especially given that Qatar’s stock market is trading near multi-year highs after adding some 32% this year.
EFG however doesn’t anticipate that losing the World Cup would seriously damage the overall Qatar investment story. The Cairo-based investment bank estimates economic growth in Qatar at 6.5% this year. “We do not expect this growth outlook to be subject to a downside scenario depending on whether the 2022 World Cup is withdrawn from Qatar or not.”
Government spending slated for the period 2014-16 would be maintained, EFG says, as the majority of it is mandated as part of the country’s broader national development strategy.
In this scenario, the analyst reckons any stock market correction will only create buying opportunities – increasing the attractiveness of Qatari yield, which remains one of the highest in the MENA region and much better than emerging markets.
Of course, the FIFA investigation could be delayed again. An overhang that the market could do without.
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(via WSJ Blogs)
