Doha, Qatar – Qatar is gearing up for a FIFA World Cup equity market boom and the country’s stock exchange to capitalize on the upcoming mega event.

With more than $4bn of foreign inflows in the first 10 months of this year alone, equity market experts say Qatar’s stock market, like most previous World Cup host markets, is outperforming peers in period before the mega tournament and it is expected. continue the same in the year after the competition.

Historically, MSCI’s average country stock market index of the host nations of the previous seven World Cups, excluding outlier Brazil, has risen 21.8 percent in the year before a World Cup and 13.4 percent in the year after, and 13.4 percent in the following year, compared to MSCI World. Average growth index of 4.3 percent and 9.5 percent respectively.

The MSCI Brazil Index was an outlier and fell 34 percent in the year after the final in 2014. That fall was due to domestic economic conditions, political crisis and high inflation prevailing at the time, says analyzed.

However, 2022 will be an extraordinary year as stock markets grapple with interest rate hikes from central banks as they try to fight inflation and extinguish the easy money supply that started during the pandemic. Qatar’s stock market was not immune either.

The QSE Index, which measures the 20 largest and most liquid stocks on the Qatar Stock Exchange (QSE), appreciated as much as 24.7 percent from the start of 2022 to April 11, 2022, but then declined to near flat territory late in the month of June and again up 12.1 percent in the year to date on September 5, 2022.

While that may not seem like much, it still makes the QSE Index a relative outperformer among most major regional and global markets in the first eight months of this year, according to the latest available data.

“As the country has been preparing for the World Cup for over a decade, focusing on a short period of stock performance is not a fair reflection,” said Akber Khan, senior director of asset management at Al Rayan-based in Doha. Investment.

“If we look at the performance of Qatar’s stock market over the last five years, when the World Cup preparations accelerated in terms of the pace of work, Qatar’s stock market is up more than 50 percent,” Khan said.

During that period, the broad index of emerging market equities is down more than 20 percent, while the global equity indices are up about 15 to 18 percent, he said.

‘Show Qatar developed’

Since 2010, when Qatar won the rights to host the World Cup, the state has spent more than $300bn to upgrade its infrastructure, including the Doha Metro, thousands of kilometers of local roads and highways, a port new, a new airport, and even a new city, as well as boosting its oil and gas facilities.

“This is actually pulling forward many medium-term development projects that the state had and in many cases, many projects that would have been completed over a period of ten years have already been completed to showcase a developed Qatar during the Cup the World,” Khan. added.

World Cup gains on the QSE are also expected to carry over into next year, mainly from construction, real estate, tourism and retail spending trickling down to exchange-listed companies and the wider economy in its entirety.

“Specifically, Qatar aims to use the event as a springboard to showcase its offers, with the number of international tourists expected to increase from 2.1 million in 2019 to 6 million per year by 2030,” said Saugata Sarkar, head of research at QNB Financial Services.

Qatari equities are already in an investment sweet spot benefiting from unique headwinds. Adding to high oil and gas prices, significant net foreign investment flows due to Qatar’s status as a safe haven, and as host of the upcoming World Cup, the country has embarked on an expansion of its liquefied natural gas (LNG) facilities. which will almost double her gas. output, catapulting him to the pole position as a major producer.

“We believe these drivers could be largely priced into the market, but should provide a high-quality catalyst for the QSE Index that helps the market grow or stabilize despite the overall global risk-off backdrop,” Sarkar said .

“While we cannot rule out near-term market volatility, we continue to remain bullish on Qatari stocks for the long-term given their defensive characteristics and strong fundamentals backing them. Net-net, we expect strong results from Qatari companies in 2022 driven largely by the FIFA World Cup,” he said.

The spoiler will be the war in Ukraine, he warned, which is to keep Qatari and global indices volatile.

However, what works in Qatar’s favor as the world deals with the possibility of a recession is that the country’s economic growth is tied to its gas production.

With new demand coming from Europe due to the war in Ukraine and the fact that Qatar is the “lowest cost” producer, “it is better prepared for the possible negative impact of a downturn in energy prices to absorb,” said Mohsin Mujtaba, director, product and development, QSE. That will also be attractive to foreign investors as they seek to rebalance their portfolios against a global slowdown, he said.

Long term effect

According to the regional equity experts, the projects initiated by the government of Qatar to host FIFA 2022 will have a long-term effect on listed companies across various sectors.

BDSwiss MENA CEO Daniel Takieddine said in an email that while the hundreds of thousands of visitors who come for the month-long football tournament will have an immediate effect, “more lasting effects on the country’s economy and financial markets could be recorded. The widely followed event could draw the attention of both individuals and companies to Qatar as a tourist destination and investment destination that fosters capital inflows.”

Oliver Kent, managing director at Dubai-based ZK Sports & Entertainment, said he sees the World Cup as “just the start of a series of large-scale events that will attract large numbers of visitors, boosting the tourism sector in the long term. ”, referring to the Formula 1 race and the 2023 Asian Cup that the country will host next year.

Qatar 2022 CEO Nasser al-Khater expects the FIFA World Cup to add $17bn to Qatar’s economy during the event, down from an initial estimate of $20bn.

While the main beneficiaries are the hospitality industry, including hotels, malls, shops and retail, Khan Al Rayan Investment said a number of listed small and mid-cap companies that have won government contracts as suppliers to larger firms over the past few years will they benefit equally from it. These include businesses that supply paving stones and building materials, as well as apartment rental and security services, among others, he said.

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