Posted on May 07, 2014

Qatar Exchange (QE), in collaboration with QNB Financial Services and Bank of America Merrill Lynch, today completed a two day roadshow, the first leg of a week-long exercise also including London, that aimed to support the further development and practice of QE’s listed companies’ investor relations.

The forum is designed to complement the companies’ ongoing investor relations activities through providing an opportunity for the senior management of listed companies to meet key decision makers from a number of the world’s largest international fund managers.  However, the forthcoming inclusion of Qatar in the MSCI Emerging Market Index provided a unique opportunity for Qatar to showcase its market-leading listed companies at a time when the profile of Qatar was set to be raised further.  The strength of the Qatar ’story’ means portfolio investors continue to view Qatar as an exciting investment opportunity, a fact that has been reflected in the enthusiastic response to the forum.

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Over the two days through a combination of one-to-one and group meetings the listed companies met with over fifty fund managers representing forty three major institutions.  Those institutions represented the most important funds allocating money to Qatar, the GCC and the broader emerging markets.   In aggregate the event hosted one hundred and forty meetings.

The delegation from Qatar was led by Rashid al Mansoori, CEO of Qatar Exchange, who delivered an introductory speech, in which he clarified why Qatar would be a distinctive investment destination: “average compound growth of 8.5% over the last 3 years and forecast real GDP growth of 6.8% for 2014, accelerating to 7.8% in 2016, as the implementation of large infrastructure projects picks up and the fast-growing population boost domestic demand. Large infrastructure projects, like the Lusail real estate development, the new Doha Port, the Hamad International Airport and the Doha Metro Rail Project will support growth going forward.  This historic and future growth is higher than all our GCC counterparts (and our new peer group in the broader emerging markets).  I would also venture there has been and will continue to be less cyclicality in the GDP growth story  for Qatar than comparable markets a fact that should not be lost on you as fund managers."

Mr. Al-Mansoori added that the Qatar's fiscal stimulus would have positive influence on attracting foreign investment portfolios. He clarified that: "investment spending is expected to grow at compound rates of 7.5% over the next five years with the Minister of Economy & Trade, HE Sheikh Ahmed bin Jassim Al Thani, recently saying that Qatar will invest around QR664bn on infrastructure projects, excluding projects in oil & gas sector, over this period.  Critically, this spending is not dependent on external financing which should place Qatar at the front of the queue for portfolio investment into those companies likely to benefit from such spending."

Mr. Al-Mansoori stated that Qatar is prominent for financial stability, adding that: "a combination of structural capital account and trade account surpluses provides a backdrop to the investment climate that cannot be matched in the region or emerging markets universe.  The banking sector in particular, represented in the room by a number of our leading banks, is underpinned by low NPLs; loan to deposit ratios (104%) and domestic savings rates which are collectively a unique selling point in their own right.  Qatar’s international reserves rose to US$ 40.2 billion reflecting strong current account surplus and lower capital outflows." 

Qatar Exchange closes New York 3 [].jpg"The Qatar GDP growth is only of use if it can be turned into future returns.  We would argue that even amongst the expanded emerging markets universe (and not just the GCC) the combination of earnings growth, dividends and sound macro-economic underpinning will be hard to beat, especially in view of the fact that the Qatari market dividend yield of 3.9%, Qatari corporates have strong balance sheets with low net gearing and a capacity to borrow which should be beneficial for ROE; and Qatari corporates have strong sustainable cashflows that support dividend payments," Mr. Al-Mansoori concluded.

Eleven listed corporates, representing blue-chip investment opportunities in the Qatari market used the opportunity to meet with the world’s leading fund managers. The Qatari companies participating were: Qatar National Bank, Doha Bank, Ooredoo, Industries Qatar, Mesaieed Petrochemical Company, Gulf International Services, Vodafone, United Development Company, Al Khaliji Commercial Bank, Qatar Electricity & Water and Milaha.