Doha, Qatar – Qatar plans to raise the FIFA World Cup equity market as the country’s stock market is poised to benefit from the upcoming big event.
With more than $4bn of foreign investment in the first 10 months of this year alone, experts in the retail market say that the Qatari market, like many of the previous World Cup markets, has surpassed its peers in preparing for the big tournament and is expected. to continue the same in this competitive year.
Historically, MSCI’s stock market index of countries that have participated in the previous seven World Cups, excluding Brazil, grew by 21.8 percent in the year leading up to the World Cup and 13.4 percent in the year after, compared to MSCI World. Growth averaged 4.3 percent and 9.5 percent respectively.
The MSCI Brazil index was the worst and fell by 34 percent in the year after the last game in 2014. This decline was due to domestic economic activity, political problems and high inflation that existed at the time, experts say.
However, 2022 is shaping up to be a strange year as stock markets experience high interest rates and central banks try to fight inflation and stop the easy money that was introduced during the pandemic. Qatar’s stock market is no longer protected.
The QSE index, which measures the 20 largest and most liquid stocks on the Qatar Stock Exchange (QSE), reached 24.7 percent from the beginning of 2022 to April 11, 2022, but then declined to a flat area at the end of June. it was also up 12.1 percent year to date on September 5, 2022.
Although this may not seem like much, it still ranks the QSE Index as the best among the regional and international capital markets in the first eight months of this year, according to available data.
“Given that the country has been preparing for the World Cup for more than a decade, focusing on short-term stocks may not look good,” said Akber Khan, head of wealth management at Doha-based Al Rayan. Investment.
“If we look at the performance of the Qatari market in the last five years, when the preparations related to the World Cup increased rapidly in terms of operational performance, the Qatari market has increased more than 50 percent,” Khan added.
During this period, the main index of emerging markets fell by more than 20 percent, while the global indices rose by about 15 to 18 percent, he said.
‘Show a prosperous Qatar’
Since 2010, when Qatar won the right to participate in the World Cup, the government has spent more than $300bn to renovate its infrastructure, including the Doha Metro, thousands of kilometers of roads and local roads, a new port, a new airport, and even a new city, as well as promoting oil and gas.
“This is advancing many of the development projects that the government had and in many cases, many of the projects that would have taken ten years have already been completed to show Qatar’s development at the World Cup,” Khan. he added.
The benefits of the World Cup on the QSE are expected to continue until next year, especially from construction, real estate, tourism and retail which trickle down to the adjusted companies and the economy as a whole.
“Specifically, Qatar’s goal is to use the event as a starting point to showcase its offerings, and boost international tourist arrivals from 2.1 million in 2019 to 6 million annually by 2030,” said Saugata Sarkar, head of research at QNB Financial Services.
Qatari equities are already in a good financial position benefiting from unique tailwinds. In addition to higher oil and gas prices, more foreign exchange flows due to Qatar’s status as a safe haven, and hosting the upcoming World Cup, the country has also increased its natural gas (LNG) capacity which has doubled its natural gas capacity. output, making it reach the surface as a major producer.
“We believe that these drivers may be the most expensive in the market, but they should provide the QSE Index with high attractiveness that supports the growth or stability of the market despite the high level of risk in the world,” said Sarkar.
“Although we cannot rule out short-term volatility in the market, we continue to remain long-term on Qatari stocks due to their security supported by their strong fundamentals. Net-net, we expect strong results from Qatari companies in 2022 driven mainly by the FIFA World Cup,” he added.
The destroyer will be the war in Ukraine, he warned, causing the Qatari and international indices to remain unchanged.
However, what works for Qatar as the world grapples with economic potential is that the country’s economic growth is linked to gas production.
With new demand coming from Europe due to the war in Ukraine and the fact that Qatar is “very cheap” to produce, “it is well prepared to absorb the impact that the recession may have on energy prices,” said Mohsin Mujtaba, CEO. Product and Development, QSE. This could also be attractive to foreign investors as they look to reposition their investments in the face of a global slowdown, he added.
Long-term effects
According to sector experts, the projects launched by the Qatari government to participate in FIFA 2022 will have a long-term effect on companies listed in various sectors.
BDSwiss MENA CEO Daniel Takieddine said in an email that, although the hundreds of visitors coming to the month-long football tournament will have an immediate impact, “long-term effects on the country’s economy and financial markets can be recorded. A highly followed event can attract public attention.” and companies that are going to Qatar as a tourist destination and as an investment center that will stimulate economic growth.”
Oliver Kent, managing director of ZK Sports & Entertainment in Dubai, said he sees the World Cup as “just the beginning of a big event that will attract more tourists, promote tourism in the long term.”, referring to the Formula 1 and 2023 Asia races. Cup that the country will do next year.
Qatar 2022 CEO Nasser al-Khater expects the FIFA World Cup to contribute $17bn to Qatar’s economy for the event, down from an initial estimate of $20bn.
While the biggest beneficiaries will be the hospitality industry, including hotels, supermarkets, shops and malls, Al Rayan Investment’s Khan said a number of small and medium-sized companies that have won government contracts as suppliers to large companies over the past few years will also benefit. These include companies that provide stone and building materials, as well as real estate and security agencies, among others, he said.
