Qatar's investment decisions are followed with great attention and interest worldwide these days. A recent statement by Qatar Holding, the direct investment vehicle for the state, calling for better terms in the merger between commodities giants Glencore and Xstrata, made headlines around the world. Analysts feel that the move shows that Qatar won’t sit by passively when a bid for one of its holdings puts it on the spot. Qatar Holding has a stake of around 11% in Xstrata.
Yesterday’s announcement that Qatar Holding plans to open Harrods hotels in cities including London, New York and Paris to build the British luxury retailer it bought two years ago into a global brand is part of Qatar’s active investment strategy.
Qatar Holding has already signed an agreement with Malaysian partners to build a Harrods hotel in Kuala Lumpur’s Bukit Bintang shopping district. About 2bn ringgit ($ 634mn) will be spent on the development and construction will start in a year.
In another major investment move, Qatar is applying for a licence under China’s Qualified Foreign Institutional Investor (QFII) programme to invest in its capital market. It is seeking an investment quota of $ 5bn, five times the current cap of $ 1bn, according to reports. Qatar plans to invest the funds mostly in China’s equity market. China’s securities regulator, the China Securities Regulatory Commission (CSRC), promises it will help complete the application process as soon as possible and also assist the Qatari authorities in applying for the investment quota.
Qatar is a major supplier of liquefied natural gas (LNG) to China. Beijing currently imports almost 5mn tonnes of LNG annually from Qatar. With demand for fuel rising in China, the number is expected to grow further in the coming years.
On another positive note, a report yesterday found that project mobilisation following the release of state budget will give impetus to Qatar’s banking sector and overall market, providing better returns to Qatar Exchange (QE) investors in the second half of this year.
QNB Financial Services (QNBFS) said in its report that the Qatari stock market had underperformed year-to-date relative to its GCC peers, but it believed resurgence was likely to emerge in the second quarter of this year.
QE was the second major loser in the GCC after Saudi Arabia with a loss 3.49% in June, according to Kuwait Financial Centre (Markaz).
“Beyond the traditionally slow summer period”, QNBFS remained bullish and “recommended an overweight on Qatar”. Qatar’s macroeconomic fundamentals remain strong on a solid footing, according to QNBFS. Estimates from QNB Group indicate a real GDP growth rate of 7.1% in 2012 and 4.7% in 2013 versus a compound annual growth rate (CAGR) of about 5% for the overall GCC.